Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Torquay and Paignton Traction Bill [Lords] (Certified Bill) (by Order).

Consideration, as amended, deferred till Monday next.

St. Helens Corporation (Trolley Vehicles) Provisional Order Bill,

Wolverhampton Corporation (Trolley Vehicles) Provisional Order Bill,

Read the Third time, and passed.

Land Drainage (Ouse) Provisional Order Bill,

Ministry of Health Provisional Order (Folkestone Water) Bill,

As amended, considered; to be read the Third time To-morrow.

Oral Answers to Questions — UNITED STATES OF AMERICA (VISAS).

Mr. DAY: 1.
asked the Secretary of State for Foreign Affairs the present charge for visas that is imposed upon the United States citizen intending to visit this country; whether there is any discrimination between first and third class passengers; has he any knowledge of any charge made by the United States authorities on British subjects for permission to leave the United States of America on their return to Great Britain; and can he give particulars?

The SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Arthur Henderson): The fee for an ordinary visa for entry to the United Kingdom granted to United States citizens is 10 dollars; the fee for a transit visa is one dollar. A special transit visa at the cost of one dollar is granted to tourists travelling on an organised tour
in this country of not more than 14 days, if they are provided with tourist third-class cabin accommodation on the Atlantic liner. With regard to the third part of the question, I understand that all persons, irrespective of nationality, travelling to Europe from the United States are required to pay a fee which varies in amount according to the cost of the passage, with a maximum of five dollars.

Mr. DAY: Is my right hon. Friend aware that in certain cases British subjects have to pay 10 dollars before they are allowed to return to this country?

Mr. HENDERSON: No. I am not aware of that.

Oral Answers to Questions — RUSSIA.

FILM "MOTHER."

Captain CROOKSHANK: 2.
asked the Secretary of State for Foreign Affairs whether he will direct the attention of those in charge of the machinery set up by the Government to inquire into Soviet propaganda in this country to the display in London in April and May of the film "Mother," by the Russian Communist Pudovkin, in view of the revolutionary nature of this film and the fact that it forms part of a newly organised system of Russian propaganda?

Mr. A. HENDERSON: I would refer the hon. and gallant Member to the reply given to the hon. Member for East Lewisham (Sir A. Pownall) on Monday last, to which I have nothing to add.

Captain CROOKSHANK: Yes, but is the right hon. Gentleman not aware that that reply stated that he had nothing to do with the licensing of films for display in this country, which is not the question that was asked? The question asked whether he was going to raise the whole problem of films before the Propaganda Inquiry Committee or not.

Mr. HENDERSON: I think that was covered in the answer that I was not going to take action.

Mr. STRACHEY: Is my right hon. Friend aware that this film deals entirely with conditions in Russia in the year
1905 and depicts the odious character of the Tsarist tyranny of that day, and has he any objection to it?

PROPAGANDA.

Mr. GODFREY LOCKER-LAMPSON: 6.
asked the Secretary of State for Foreign Affairs when he expects to be in a position to inform this House of the result of the inquiry being instituted by the Government into Soviet propaganda?

Mr. A. HENDERSON: I am not yet in a position to say when the investigations now proceeding are likely to be terminated. But, as I informed the House on 26th May, His Majesty's Government will decide on the basis of the inquiries what action, if any, will be appropriate.

Mr. LOCKER-LAMPSON: Can the right hon. Gentleman say if we shall have some statement from the Government on the subject before the House rises?

Mr. HENDERSON: No, I cannot. I must allow the Government to decide what action is going to be taken on the information that is supplied after the inquiry.

Sir KINGSLEY WOOD: What is the reason for the delay?

Mr. HENDERSON: There is no unnecessary delay. The inquiry is proceeding.

Mr. MARJORIBANKS: Has the right hon. Gentleman considered the wide powers of inquiry given by the Official Secrets Act in reference to this question?

RELIGIOUS SITUATION.

Sir K. WOOD: 3.
asked the Secretary of State for Foreign Affairs whether he has recently received any further report from the British Ambassador concerning religious persecution in Soviet Russia?

Mr. A. HENDERSON: No further comprehensive report has been received, but recent telegraphic correspondence seems to indicate that there has been some improvement following upon the gradual application of the decree of March last.

Sir K. WOOD: Does the right hon. Gentleman therefore now agree that all the representations that have been made have had some good effects?

Mr. HENDERSON: That is a matter of debate.

Oral Answers to Questions — LEAGUE OF NATIONS (MINORITY TREATIES).

Mr. MANDER: 4.
asked the Secretary of State for Foreign Affairs if it is the intention of the Government at the Council or Assembly of the League of Nations in September to raise the question of the manner in which the treaty obligations of States towards minorities within their borders are being carried out?

Captain PETER MACDONALD: 9.
asked the Secetary of State for Foreign Affairs whether it is the intention of the Government to bring before the Assembly of the League of Nations in September the question of the working of the minority treaties; and, if so, upon what grounds?

Mr. A. HENDERSON: The policy to be adopted by His Majesty's Government at the forthcoming meeting of the Council and the Assembly, in this as in other matters, it at present under consideration.

Mr. MANDER: Will the right hon. Gentleman not endeavour to give a lead in this matter as he has so effectively done in other directions?

Mr. HENDERSON: That will depend on the result of the consideration of the different points which is now being given.

Oral Answers to Questions — WEI-HAI-WEI (RENDITION).

Major ROSS: 8.
asked the Secretary of State for Foreign Affairs whether in regard to the proposed rendition of Wei-hai-Wei on or before 30th October, 1930, regard will be had to the local political situation?

Mr. A. HENDERSON: Yes, Sir. His Majesty's Government must, in view of the unsettled state of affairs, consider the position in the light of the circumstances existing on the particular date specified in the Convention.

Major ROSS: Does the right hon. Gentleman propose that Wei-hai-Wei should be handed over to the Nanking Government, even if they are not in effective control of that area, or is there any possibility of its being handed over to any other Government?

Mr. HENDERSON: I thought I had answered that question by saying we would have to decide according to the circumstances then existing. The position is too unsettled to say at this moment what we intend to do.

Major ROSS: Is it possible that Wei-hai-Wei will not be handed over as provided by the White Paper?

Mr. HENDERSON: The hon. and gallant Member must wait and see.

Oral Answers to Questions — ROYAL NAVY.

OFFICERS' TRAINING.

Captain W. G. HALL: 10.
asked the First Lord of the Admiralty the cost of training a Dartmouth entry cadet, a special entry cadet prior to being commissioned, and a mate prior to being commissioned as such; the number of cadets to be entered this year via Dartmouth; the special entry system; and the number of mates to be promoted?

The FIRST LORD of the ADMIRALTY (Mr. Alexander): As the reply is rather long, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.

The reply is as follows:

The gross overhead cost of training a cadet at the Royal Naval College, Dartmouth, based on a period of 11 terms (3⅔ years) at that establishment and excluding the cost of any training given after the cadet is sent to the Fleet for service afloat on completion of his Dartmouth course, is estimated at £1,140. Towards this expense, contributions amounting to approximately £455 on the average are received from the parents or guardians. The overhead cost of training (duration one year) of a special entry cadet in His Majesty's Ship "Erebus" is estimated at £356, based on latest figures available. The overhead cost of the various technical courses undergone by acting mates prior to confirmation in that rank is estimated at £390. This sum is based on latest figures available and represents a proportionate part of the cost of the technical establishments at which the instruction is given. Neither the number of cadets to be entered during the year nor the number of mates who will be selected can yet be given.

BUILDING PROGRAMME.

Lieut.-Commander KENWORTHY: 11.
asked the First Lord of the Admiralty what will be the total cost of the warships which it has been decided to commence this financial year since the signing of the Naval Treaty?

Mr. ALEXANDER: The vessels which it has been decided to commence this financial year since the signing of the Naval Treaty are three deferred submarines of the 1929 programme and the new construction programme for 1930, details of which were announced to the House of Commons on 25th June. The estimated total cost of these ships, inclusive of cost of guns, torpedoes, and ammunition, is approximately £10,540,000. It should be noted, however, that naval construction cancelled by the present Government would have cost some £12,000,000 and that the total cost of the programmes of 1928, 1929 and 1930 will be well below the cost originally proposed for 1928 and 1929.

Lieut.-Commander KENWORTHY: Can my right hon. Friend give the total cost, including guns, torpedoes and ammunition?

Mr. ALEXANDER: I included that.

Lieut.-Commander KENWORTHY: My right hon. Friend said "exclusive."

Mr. ALEXANDER: No—"inclusive."

Mr. HORE-BELISHA: When is it proposed to introduce the Supplementary Estimate, for how much will it be, and will it be before the House rises?

Mr. ALEXANDER: The Estimate is in the printing press and will be available in the Vote Office as soon as it is received from the printer. The amount is just over £200,000, most of which is concerned with the cost this year of the three submarines which are being built under the 1929 programme.

Lieut.-Commander KENWORTHY: How much employment will that £200,000 give this year?

Mr. ALEXANDER: A very considerable amount.

12. Lieut.-Commander KENWORTHY: asked the First Lord of the Admiralty whether he can give an estimate of the total cost of new building of warships
and replacements to provide the maximum tonnage of cruisers, destroyers and submarines allowed to this country under the Naval Treaty, in order that such tonnage shall be under age at the date of the expiration of the Treaty?

Mr. ALEXANDER: It would be a complete waste of time to try and produce such figures, since, as has already been made clear to the House, His Majesty's Government have no intention of building along the lines indicated. Moreover, it is not possible to give an accurate or useful monetary estimate in respect of various categories in which ships may be built of varying designs and equipment on which no decision can yet be taken.

Lieut.-Commander KENWORTHY: Why is my right hon. Friend unable to make this estimate, in view of the fact that the categories of ships are laid down quite clearly in the Treaty and we can only build up to a certain amount?

Mr. ALEXANDER: I have already said that His Majesty's Government do not at present propose to build along the lines indicated in the question, and the second part of my answer indicated that until we know exactly all the characteristics of the ships which we may decide to build we can give no accurate estimate.

Major ROSS: Are we to understand that it is not proposed to build even up to the inadequate limits provided for in the Treaty?

Major ROSS: 26.
asked the First Lord of the Admiralty what is the estimated amount of naval tonnage now under construction or projected by the British Empire and the United States of America, respectively?

Mr. ALEXANDER: The totals are approximately as follow:



Tons.


United States of America
140,000


British Commonwealth of Nations
115,000


These figures refer only to vessels which have actually been authorised and for which money has been appropriated in this year's estimates, except that they include this Government's recently announced programme for 1930 and the submarines of the 1929 programme, for which a Supplementary Estimate is shortly to be introduced.

Major ROSS: Do these figures include all the shipbuilding which is projected or under construction in this country, but only part of that projected for the United States; and is there not a much larger quantity of tonnage projected in the United States which is not included in the return?

Mr. ALEXANDER: If the hon. and gallant Gentleman will study my answer, he will find that his supplementary question is unnecessary. I think that my answer makes it quite clear.

Mr. HORE-BELISHA: When the right hon. Gentleman gives the figures for the British Commonwealth of Nations, does he mean that no ships are under construction in any other part of the British Empire besides this country?

Mr. ALEXANDER: The figures included in the London Naval Treaty were for the Empire as a whole, and it is obvious that in regard to future construction programmes, there must be some consultation.

Mr. MARJORIBANKS: Did any of the Dominions apply for separate advice and representation at the Naval Conference; if so, what answer was given?

Mr. ALEXANDER: That question does not arise out of the answer.

MATES.

Mr. T. LEWIS: 13.
asked the First Lord of the Admiralty the reasons why a naval rating when commissioned is given the separate rank and distinctive title of mate, a practice which does not exist in the Army or Royal Air Force, and why mates are messed in the ward room with the senior officers instead of in the gun room with their contemporaries, the sub-lieutenants?

Mr. ALEXANDER: It has always been the intention that promoted naval ratings should have equal status with ex-cadet officers, but they would be gravely hampered if, during the period immediately following selection, they were not distinguished from the ex-cadet sub-lieutenants, whose preliminary qualifications would be quite different. When therefore the scheme was inaugurated in 1912 it was decided, after careful consideration, to give them the title of "mate," which is the old name of the sub-lieutenant. The reason for including them in the ward
room instead of in the gun room mess was that the mates under the 1912 scheme were expected to be always three to six years older than the sub-lieutenants. It was considered, therefore, more suitable to include them in the ward room. This matter will form part of the inquiry I am having made into the whole question.

Mr. HORE-BELISHA: 19.
asked the First Lord of the Admiralty whether, in view of the inquiry into the matter of lower-deck promotion, any of the lieutenant-commanders (ex-mate) will be enabled to give their views on the defects of the mate scheme?

Mr. ALEXANDER: Yes, Sir.

Mr. HORE-BELISHA: 20.
asked the First Lord of the Admiralty whether the departmental inquiry into the working of the mate scheme is now in operation; and when it is anticipated that he will be able to make a statement?

Mr. ALEXANDER: The answer to the first part of the question is contained in the reply which I gave to the hon. Member on 7th May last [OFFICIAL REPORT, column 981]. With regard to the second part of the question, the inquiry has not yet reached a sufficiently advanced stage for a statement to be made.

Captain HALL: Will it be possible to include a representative of the mate class when the right hon. Gentleman is making these inquiries into the whole question?

Mr. ALEXANDER: I intended making an announcement to-day, but as the question has been asked, I may say that we have had a preliminary survey in the Admiralty, and I have now decided to appoint a small departmental committee to continue the inquiries on the basis already made, and to include on the committee an officer of as superior a rank as possible who is an ex-mate, so that the position may be adequately safeguarded.

ADMIRALTY (Ex-OFFICERS).

Mr. T. LEWIS: 14.
asked the First Lord of the Admiralty how many ex-officers, naval and marine, are employed in Government Departments of the Admiralty; how these appointments are made; if the candidates are selected by
a board; and what are the terms of service?

The CIVIL LORD of the ADMIRALTY (Mr. G. H. Hall): Excluding officers employed in what can be regarded as essentially naval services, e.g., the recruiting service, Royal Marine police, etc., some 80 retired naval and marine officers are employed in various departments of the Admiralty at headquarters and the out-ports. These comprise officers in the Naval Ordnance Inspection, Research and Design Branch, the regulation for recruitment to which are now under revision, and officers in His Majesty's dockyards, factories, Admiralty headquarter establishments, etc. Appointments are made by the Board and selections are made with a view to making the best use of the services of suitable officers who may be available when vacancies arise. The terms of service vary according to the appointment held.

RECRUITING STAFF.

Mr. T. LEWIS: 15.
asked the First Lord of the Admiralty the percentage of naval and marine officers, respectively, on the recruiting staff; how many of these officers are in receipt of a pension of £400 or upwards; and how many officers are there waiting on the list to be considered?

Mr. G. H. HALL: There are 11 naval (including seven medical officers) and five Royal Marine officers serving on the Naval Recruiting Staff. Of these, nine officers (including six Naval medical officers) are in receipt of retired pay of £400 or upwards. There are 12 suitable candidates whose names are on the waiting list.

DOCKYARD ESTABLISHMENTS (VACANCIES).

Mr. MOSES: 17.
asked the First Lord of the Admiralty whether any decision has been reached concerning the filling of vacancies on establishment in His Majesty's dockyards and the departure from the one-in-eight principle now in operation?

Mr. G. H. HALL: The reply is in the negative.

DOCKYARD MEN (LEAVE).

Mr. MOSES: 18.
asked the First Lord of the Admiralty whether any decision has been reached regarding the leave with pay of chargemen, recorders, yard
craftsmen, etc., in His Majesty's dockyards and other Government establishments?

Mr. G. H. HALL: The reply is in the negative.

Mr. MOSES: Will the hon. Gentleman tell us when we may expect the reply, as it has been so long under consideration?

OFFICERS' MARRIAGE ALLOWANCE.

Mr. HORE-BELISHA: 21.
asked the First Lord of the Admiralty whether the Board of Admiralty has now given fresh consideration to the award of marriage allowances for naval officers; and whether he can now make a statement?

Mr. ALEXANDER: This matter is still under the consideration of the Board of Admiralty.

Mr. HORE-BELISHA: Can the right hon. Gentleman give any indication when a decision is likely to be reached?

Mr. ALEXANDER: I cannot, as there are many contingent matters which will take a long time to examine.

COMMISSIONS (LOWER-DECK CANDIDATES).

Captain HALL: 22.
asked the First Lord of the Admiralty if he will consider utilising the turret drill-ship His Majesty's Ship "Terror," at Portsmouth, for training lower-deck candidates for commissions, in a manner similar to the training given special entry cadets in His Majesty's Ship "Erebus," at Devonport?

Mr. ALEXANDER: There is ample accommodation in existing establishments for training all officers at presentrequired. No justification can be seen for incurring additional expenditure in the manner proposed.

Captain HALL: As it is anticipated increasing the number who are promoted from the lower-deck, would it not be a good thing if this ship were used for this purpose?

Mr. ALEXANDER: I think that if you promote a large number from the lower-deck, you will not increase the number of officer vacancies. The point is that the present accommodation for training officers is sufficient.

SPECIAL ENTRY CADETS.

Captain HALL: 23.
asked the First Lord of the Admiralty the number of executive special entry cadets at present under training in His Majesty's Ship "Erebus" at Devonport; the total staff employed for their professional and educational training; and the other purposes for which this ship is kept in commission?

Mr. ALEXANDER: The turret drill ship "Erebus," in addition to its duties as such, is used for the preliminary training together of all naval cadets, entered otherwise than through the Royal Naval College, Dartmouth, of whom there are training as executive officers 13 special entry and nine direct entry cadets. In addition there are certain Dominion and foreign officers. All the different educational duties are carried out by the complement of the ship, which includes three naval instructors, except that a teacher of French attends from the shore for a limited number of hours a week.

COOK RATINGS.

Sir BERTRAM FALLE: 24.
asked the First Lord of the Admiralty the number of cook ratings on board His Majesty's Ship "Vernon" employed to cook breakfast for over 200 men; if he is aware that in May there were two cooks at the Royal Hospital, Haslar, for duty with the sick-berth staff; that a third cook had to be brought in after an interval, during which the naval cooks were overworked; that even with three cooks the work is excessive; that in No. 1 Galley, Royal Naval Barracks, out of a staff of 22, 14 are new entry Royal Marines, sick or undergoing outside training, and eight only are left to attempt the work; that in Galley No. 2 officers' cooks have been brought in to assist; and if he will do his best to remedy this state of affairs, which is not fair to the naval cooks' branch, and must mean the cooking of food and rewarming it for the messing of the ratings?

Mr. G. H. HALL: His Majesty's Ship "Vernon" is allowed a staff of 17 cook ratings, with one additional cook rating for every 60 ratings borne in excess of 1,000. The number required to cook breakfast probably depends on the amount of night leave granted, but I regret that there has been no time for inquiry on this point. As regards the second part of the question, I would
refer the hon. Member to the information given in reply to his question of the 29th May. The reference to Royal Marines in connection with No. 1 Galley, Royal Naval Barracks, is not understood. The use of supernumerary officers' cooks to assist in Galley No. 2 should enable more leave to be given to the other cook ratings, and no objection is seen to the practice.

Sir B. FALLE: The hon. Gentleman says that a certain number is allowed; how many are working?

Mr. HALL: I take it that 17 are working.

Sir B. FALLE: 25.
asked the First Lord of the Admiralty if he is aware that there are not a sufficient number of naval cook ratings at the Royal Naval Barracks, Portsmouth; that bread for the Royal Naval Barracks is being purchased from outside sources because of the insufficiency in numbers of naval cooks; and that the naval cooks' branch complain in the welfare requests Nos. 5 and 6 that the number of cooks is insufficient for the duties and that hardship is caused to the branch and to the ratings generally?

Mr. HALL: The reply to the first part of the question is in the negative. As regards the second part, the intention of the bakery at the Royal Naval Barracks is for training for duties afloat and the normal procedure is to purchase locally. The welfare requests referred to in the last part of the question are being considered.

Sir B. FALLE: What is the answer to the last part of the question?

Mr. HALL: It is being considered.

Oral Answers to Questions — UNITED STATES NAVY (BUILDING PROGRAMME).

Lieut.-Commander KENWORTHY: 16.
asked the First Lord of the Admiralty what naval appropriations for new warship building have actually been passed by the United States Congress since the London Naval Conference?

Mr. ALEXANDER: No naval appropriations have been passed by the United States Congress since the London Naval Conference for warships not hitherto authorised. The United States Naval Estimates, however, which have been
voted since the London Naval Conference include about $49,000,000 for the laying down or continued building of new warships. This includes money for the laying of the keels in 1930 subsequent to the Conference, of five 10,000 ton 8-inch cruisers, in addition to the ten 8-inch cruisers already built and building, two submarines and one aircraft carrier.

Oral Answers to Questions — EAST AFRICA (JOINT COMMITTEE).

Mr. ORMSBY-GORE: 30.
asked the Under-Secretary of State for the Colonies whether any unofficial communities in East Africa have yet expressed a desire to submit representations of their views before the Joint Select Committee on Closer Union in East Africa; what reply is being made to any such request; and when it is anticipated that the views of the Governors of Kenya and Tanganyika, respectively, on the Government's proposals will be received?

The UNDER-SECRETARY of STATE for the COLONIES (Dr. Drummond Shiels): The answer to the first part of the question is in the negative. The second part does not, therefore, arise. The Governors of Kenya and Tanganyika and the Acting-Governer of Uganda have been asked to submit the views of their Governments by despatch on the proposals, but it is not yet known when these may be expected.

Mr. ORMSBY-GORE: Will the hon. Gentleman make clear at as early a date as possible what procedure the Government propose whereby unofficially the different races will be able to submit their views to the Joint Select Committee?

Dr. SHIELS: Yes, that will be done.

Mr. MANDER: 31.
asked the Under-Secretary of State for the Colonies at what stage it is proposed to bring before the Mandates Commission of the League of Nations the Government's new policy for closer union in East Africa with reference to the position of Tanganyika?

Dr. SHIELS: Copies of the statement of the conclusions of His Majesty's Government in the United Kingdom with regard to closer union in East Africa have been forwarded to members of the Permanent Mandates Commission. The Commission will thus have an opportunity
of considering them and making any observations on them which it may wish.

Sir PHILIP RICHARDSON: 7.
asked the Secretary of State for Foreign Affairs if he has received any representations from the German Government with respect to the closer union policy for East Africa which affects the Tanganyika Mandate?

The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Dalton): No, Sir. My right hon. Friend has received no such representations.

Oral Answers to Questions — WEST INDIAN SUGAR INDUSTRY.

Mr. ORMSBY-GORE: 32.
asked the Under-Secretary of State for the Colonies whether any of the West Indian Governments have accepted the proposals of the Secretary of State for the Colonies for sharing losses on next year's West Indian sugar crop; whether any further representations regarding the seriousness of the social conditions arising out of the crisis in those Colonies dependent on sugar industry have been received; what further proposals the Government are now proposing to make; and whether they will now undertake to maintain in fact the present value of the preference on Empire sugar for a term of years?

Dr. SHIELS: The answer to the first and fourth parts of the question is in the negative, and to the second in the affirmative. My Noble Friend continues to watch the situation closely, and is in telegraphic communication with the Governments concerned, but I am not yet in a position to announce the steps to be taken. I am not in a position to add to the announcement already made with regard to the preference accorded to Empire sugar.

Mr. ORMSBY-GORE: The hon. Gentleman says the matter is still under consideration. When may we expect to have some announcement of some real honouring of the Government's vaunted principles of trusteeship for the Negro races?

Oral Answers to Questions — HENDON AERODROME (LOW FLYING).

Sir PHILIP CUNLIFFE-LISTER: 34.
asked the Under-Secretary of State for
Air whether he has received complaints from residents adjacent to the Hendon aerodrome of nuisance caused by low flying, particularly during the week-ends; and what steps he proposes to mitigate this nuisance?

The UNDER-SECRETARY of STATE for AIR (Mr. Montague): Yes, Sir, such complaints have been received from time to time, and my Noble Friend and, indeed, all concerned at the Air Ministry are fully alive to the desirability of lessening any inconvenience caused to residents. It is impossible, however, wholly to remove it, since Hendon aerodrome is an auxiliary Air Force station at which flying is necessarily done to a large extent during week-ends, when alone many of the pilots concerned have time to attend. Orders have been issued prohibiting flying during the hours of Church services on Sunday morning and restricting it as far as possible during those of evening service. Anything in the nature of unnecessary low flying is prohibited, and in suitable cases disciplinary action would be taken against offenders, as I explained in my reply to my hon. Friend the Member for Southwark, Central (Mr. Day) on 28th May. I can assure the right hon. Gentleman that everything that is possible will be done to reduce the inconvenience to residents to a minimum, but I am afraid that noise in the vicinity of an aerodrome is at present inevitable.

Sir P. CUNLIFFE-LISTER: I thank the hon. Gentleman for his answer and I appreciate the difficulties there are. Would he be willing for the Secretary of State to discuss the difficulties with representative residents from the neighbour-hood?

Mr. MONTAGUE: Yes, Sir; but I would point out that we have had a discussion on this problem, which is one that affects London all the way round, as well as Hendon.

Sir P. CUNLIFFE-LISTER: If the hon. Gentleman or his chief will receive personal representations, may I arrange that with him?

Mr. MONTAGUE: Yes.

Mr. MACLEAN: Is it not the case that those living in the vicinity of shunting yards suffer a great deal more nuisance than those living in the vicinity of Hendon aerodrome?

Mr. DAY: Is not low flying a matter for the police?

Mr. MONTAGUE: Yes, that is perfectly true. That question is entirely in the hands of the police.

Major ROSS: How are the police to act in this matter? Are they provided with parachutes or aeroplanes?

Captain HALL: Is it not a fact that this nuisance is most apparent just before the Hendon Pageant and——

Mr. SPEAKER: Mr. Day.

Oral Answers to Questions — TRANSPORT.

PUBLIC VEHICLES (DRIVERS' HOURS).

Mr. DAY: 35.
asked the Minister of Transport whether his attention has been drawn to the dangers arising to the public through excessive hours of labour worked by drivers of licensed chars-a-banes and motor omnibuses on long-distance routes; and whether he has taken any action in the matter?

The MINISTER of TRANSPORT (Mr. Herbert Morrison): My attention has been drawn to the matter to which my hon. Friend refers and provisions to deal with it are included in Clauses 19 and 92 of the Road Traffic Bill now before Parliament.

Mr. DAY: Have the officers of the Department made any investigation into these complaints?

Mr. MORRISON: I am quite satisfied that bona fide complaints exist, and therefore, without waiting for the officers of my Department to take action, I took legislative action in the Road Traffic Bill.

RIVER TAMAR (BRIDGE).

Mr. FOOT: 38.
asked the Minister of Transport if he is in a position to make any statement as to the report of the engineer on the proposal to construct a bridge across the River Tamar?

Mr. HERBERT MORRISON: I have not yet received the report of the engineer but expect to receive it during the course of this month.

Mr. FOOT: If I put down another question in the course of a fortnight,
could the Minister then give an answer? This is a matter of considerable interest to the West Country.

Mr. MORRISON: I cannot go beyond what I have said, that I anticipate receiving the report in the present month.

RAILWAY CARRIAGE DOORS (ACCIDENTS).

Mr. MATHERS: 39.
asked the Minister of Transport the number of fatal and non-fatal accidents that have occurred during each of the last five years through railway carriage doors becoming unfastened while trains were in motion; whether representations have been made to him regarding the need for greater safeguards in this connection; and whether he can afford greater security to passengers by requiring additional safety devices to be used?

Mr. HERBERT MORRISON: The total number of accidents to persons falling out of railway carriages during the running of trains during the last five years amounts to between 19 and 35 persons killed and between 42 and 51 persons injured in each year. The liability of accident from this cause is about one in every 20,000,000 passenger journeys. It is not possible to say what proportion of these accidents might have been prevented by the use of a different type of door fastening. The matter, which is continually under review, is referred to on page 19 of the report on the accidents that occurred on the railways of Great Britain during 1928, and in all the circumstances, and having regard to the fact that any arrangements involving increased difficulty in opening doors might create danger in certain circumstances, I have not felt justified in pressing companies in the matter.

Mr. MATHERS: During this period of five years does the number of these occurrences show an upward or a downward tendency?

Mr. MORRISON: There have been increases, but, on the other hand, in one or two years there were decreases, so that I do not think any particular tendency is revealed by the figures.

Mr. SKELTON: Would it not be a good thing to have everyone medically examined before entering a train to see whether they are likely to fall out?

RIVER FORTH (ROAD BRIDGE).

Major COLVILLE: 43.
asked the Minister of Transport if he can make a statement regarding the proposal to pro vide an improved crossing for road vehicles over the River Forth at or near Queensferry?

Mr. HERBERT MORRISON: I would refer the hon. and gallant Member to the reply given on 14th May to a similar question by the hon. Member for West Edinburgh (Mr. Mathers).

Major COLVILLE: Has the Minister nothing to add in regard to recent meetings held in Scotland on this subject?

Mr. MORRISON: I am not sure whether at that date the meetings had been held. A meeting of the local authorities in Edinburgh was held with my co-operation. There were divided views as to the merits of the bridge, and the promises of financial contributions amounted only to about 2 per cent. of the estimated cost.

HUMBER (BRIDGE).

Mr. WALKER: 44.
asked the Minister of Transport whether in view of the situation of unemployment in the steel industry, he will favourably consider the proposals for the construction of a bridge over the Humber?

Mr. HERBERT MORRISON: I would refer my hon. Friend to the answer given on 26th June to a similar question by the hon. and gallant Member for the North-Western Division of Kingston-upon-Hull (Sir A. Lambert-Ward) of which I am sending him a copy.

Lieut.-Commander KENWORTHY: Can the Minister say when he will be in a position to call the local authorities concerned together?

Mr. MORRISON: No, Sir, I am not able to say that.

Lieut.-Commander KENWORTHY: Is the Minister aware that this matter has been in hand for a long time?

Mr. MORRISON: That is a kind of misrepresentation that I cannot allow to pass. The reports of the engineers have been received, and no possible delay has taken place. I do not think that the local authorities have come to any conclusion yet. It is wrong that such general accusations should be made.

Lieut.-Commander KENWORTHY: On a point of personal explanation. Is my hon. Friend aware that I did not at all intend to misrepresent him and have no desire to do so, and I am quite prepared to express my regret if he thinks I did. My hon. Friend has been very helpful.

Mr. LOUIS SMITH: Will the Minister taken an early opportunity of making the journey from Grimsby to Hull and personally investigate the most uncomfortable means of transport between there two leading centres, particularly in the winter, in foggy weather?

LONDON-WORCESTER ROAD.

Captain BOURNE (for Sir JOSEPH LAMB): 37.
asked the Minister of Transport whether he has had under consideration the expediency of restoring and reconstructing the London-Worcester direct road between Wheatley and Over-Kiddington to enable traffic to Worcester and to Birmingham to by-pass Oxford and, if so, with what result; and whether, pending such reconstruction, he will cause the existing route to be efficiently signposted for the guidance of through traffic?

Mr. HERBERT MORRISON: Consideration has been given to this suggestion, but it is doubtful whether its adoption would lead to any marked diminution of traffic in Oxford. The route referred to is a factor in the problem as a whole, but in any event it would be inadvisable to encourage its extended use by through traffic until considerable and extensive improvements have been effected.

Oral Answers to Questions — UNEMPLOYMENT.

LORD PRIVY SEAL (DUTIES).

Sir K. WOOD: 45.
asked the Prime Minister whether he can state in detail the duties of the Lord Privy Seal in relation to unemployment, apart from the membership of the Committee of Ministers dealing with this question?

The PRIME MINISTER (Mr. Ramsay MacDonald): Apart from the duties attaching to membership of the Special Committee of Ministers the Lord Privy Seal has no specific duties relating to unemployment though, as a member of that
committee, free from Departmental preoccupations, he will be in a position to devote his whole time to the committee's heavy work.

Mr. MARJORIBANKS: Will he answer questions on unemployment in this House?

Sir HERBERT SAMUEL: Can the right hon. Gentleman say whether the departmental organisation established by the Lord Privy Seal continues in existence?

The PRIME MINISTER: No, that organisation does not continue in existence. As I stated in the House, the responsibility has gone back into the various Departments, the work of which is now being co-ordinated.

Sir K. WOOD: Has not the First Commissioner of Works any duties in connection with it?

Mr. BECKETT: Which Minister is responsible for co-ordinating the work?

The PRIME MINISTER: The Lord Privy Seal has the matter in hand as a member of the committee of Ministers.

Mr. WISE: Are we to address general questions on unemployment to the Prime Minister, or the Lord Privy Seal, or to whom?

The PRIME MINISTER: I think the best thing will be for hon. Members to go on just as they have done. Whenever any doubt arises as to who should answer a specific question, it is always referred to me, and I will do my best to meet the convenience of the House.

Captain CROOKSHANK: Does the new Lord Privy Seal receive the same salary as his predecessor for less work?

The PRIME MINISTER: He does not.

PUBLIC WORKS (GRANTS, LOCAL AUTHORITIES).

Sir K. WOOD: 46.
asked the Prime Minister whether he proposes to make a statement to the House at an early date concerning the increased grants proposed to be made to the local authorities in respect of public works; and whether he can give an estimate of their cost to the National Exchequer?

The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Mr. Lawson): I have been asked to reply. A detailed statement on this subject will be published as a White Paper on Friday next. The cost to the Exchequer must naturally depend on the extent to which local authorities take advantage of the improved terms of grant.

Sir K. WOOD: Is there any estimate of what the additional cost will be?

Mr. LAWSON: No, as I say, that will depend on the extent to which the local authorities take advantage of the terms offered.

Sir K. WOOD: But has not any consideration been given to what the further cost to the local authorities will be?

Mr. MARJORIBANKS: Do the Government propose to introduce any legislation on this subject before the end of July?

HINDERWELL.

Mr. MANSFIELD: 63.
asked the Minister of Labour if she has received an application from the Hinderwell Urban District Council for a grant to enable them to commence certain schemes of work in that area for the purpose of providing employment for the unemployed miners who are laid idle as a result of the Boulby and Grinkle mines closing down; and, if so, what action she proposes to take in the matter?

Mr. LAWSON: Preliminary inquiries were made in April last by the Hinder-well Urban District Council regarding certain schemes of work in contemplation, but no formal application for grant from Exchequer Funds in aid of such works has yet been received by the Unemployment Grants Committee.

LIVERPOOL.

Mr. HALL-CAINE: 64.
asked the Minister of Labour the total amount of the schemes submitted in proper order by the Liverpool Corporation for the relief of unemployment; the sum that has already been sanctioned for grant; and the number of men at present employed upon those schemes?

Mr. LAWSON: As the reply is necessarily long, I will, if I may, circulate it in the OFFICIAL REPORT.

Following is the reply:

Since 1st June, 1929, the Liverpool Corporation have submitted to the Unemployment Grants Committee formal applications for grant from Exchequer funds in aid of 45 schemes of work for the relief of unemployment, estimated to cost £703,898. Of these, 26 schemes, estimated to cost £447,918, have been approved for grant. In addition, one scheme, estimated to cost £194,700, submitted prior to 1st June, 1929, has also been approved for grant. The total amount ranking for grant in respect of these schemes is £590,243. At 30th May last the number of men employed on the approved schemes was 749.

As regards roads, of the schemes included in the original five years' programme, and in respect of which approval in principle was given in October last, formal applications have been submitted in respect of works estimated to cost £830,499. Of these, grants have been issued in respect of works estimated to cost £219,481, and the issue of the grants in respect of the remainder of the schemes is deferred pending the submission of further details by the corporation. In addition to the programme referred to above, the corporation have submitted applications in respect of improvement works on classified roads and bridges estimated to cost £299,152. Of these, grants have been issued in respect of schemes estimated to cost £106,998, and further details with regard to the remainder are awaited. At 30th May last the number of men employed on the approved schemes was 447.

BENEFIT DISALLOWED.

Mr. McGOVERN: 65.
asked the Minister of Labour how many persons registered at Parkhead Employment Exchange were admitted to benefit as a result of the abolition of the not-genuinely-seeking-work condition; and how many of these have since been refused benefit as not normally engaged in insurable employment?

Mr. LAWSON: I regret that statistics giving the information desired are not available.

Mr. McGOVERN: Can the hon. Gentleman say when the information will be available?

Mr. LAWSON: It is not possible to get this information explicitly, because the figures are naturally bound up with the ordinary registration figures.

Mr. BECKETT: Is it not the fact that we used to be able to get the number of those who were refused benefit on the ground that they were not genuinely seeking work; and why cannot we get the figures for the total number disqualified under the present arrangement?

Mr. LAWSON: This question is much more complicated than that.

Mr. STEPHEN: Is it not the case that all the Employment Exchanges have full lists of the names of individuals, and, in view of the importance of this matter, does not my hon. Friend think that some of the Exchanges should have these facts at hand?

Mr. LAWSON: I have made a very close inquiry into this matter, and I am sure that it is not possible to get these figures. Of course, an estimate could be made, but it could only be done in a very general way.

Mr. BUCHANAN: Could not the Parliamentary Secretary at least tell the hon. Member for Shettleston (Mr. McGovern) the number of those who have been refused benefit at the Parkhead Exchange since the passing of the new Act on the ground of not being normally in insurable employment?

Mr. LAWSON: That could not be done for the simple reason that what the hon. Member asks for is the number of those originally accepted under the new Act who have since been refused benefit. That is not possible.

Mr. McGOVERN: I suppose it is not desirable.

Mr. ERNEST BROWN: Is it not the case that, if this question cannot be answered simply because six months ago scarcely any were refused benefit on the ground of not being normally in insurable employment, all that the hon. Gentleman needs to do is to give the figure that he knows?

Mr. LAWSON: It is possible to get the number of those who were refused benefit under the Act generally, but it is not possible to get the number refused out of those who were accepted under the new Act.

Mr. BECKETT: Is it not the fact that this condition has been abused in exactly the same way as the old one?

Mr. LAWSON: No; that is not so.

Mr. McGOVERN: It is so.

Oral Answers to Questions — RAW PRODUCE (PRICES).

Mr. ALLEN: 47.
asked the Prime Minister whether, in view of the fact that the fall in the prices of raw produce has affected the buying power of our overseas markets, His Majesty's Government will cause its economic staff to prepare and will lay upon the Table of the House a report on the economic causes of the fall in the prices of raw produce?

The PRIME MINISTER: I could not undertake to publish, reports prepared for the use of His Majesty's Government by their advisers on highly disputable topics. Certain aspects of the question referred to by the hon. Member are receiving attention from the Committee on Finance and Industry (the Macmillan Committee).

Oral Answers to Questions — HADRIAN'S WALL.

Sir CHARLES OMAN: 48.
asked the First Commissioner of Works whether arrangements have yet been made to restrict the quarrying of whinstone between the Roman wall and the vallum; and whether the Government is in a position to state definitely the acreage over which quarrying is to be permitted?

The FIRST COMMISSIONER of WORKS (Mr. Lansbury): I am not yet in a position to make a statement more definite than that which I made in this House on 2nd June last. The negotiations to which I referred on that occasion are still in progress.

Sir C. OMAN: Will the right hon. Gentleman take early measures to see that there is a proper acknowledgment of the stoppage of these works?

Mr. LANSBURY: I am not in a position to stop these works, and I am not in any hurry to expedite them.

Sir K. WOOD: Will the right hon. Gentleman say if he intends to introduce any legislation on this matter?

Mr. LANSBURY: Not on this particular matter, but on the question of the preservation of the wall and other monuments.

Oral Answers to Questions — EMPIRE MARKETING BOARD.

Mr. DAY: 49.
asked the Secretary of State for Dominion Affairs the number of schools in the United Kingdom which have applied for poster reproductions and leaflets issued by the Empire Marketing Board; whether these posters and leaflets are being regularly supplied as issued; and has he any information of the number of schools in various parts of the Empire that are receiving supplies?

The UNDER-SECRETARY of STATE for DOMINION AFFAIRS (Mr Lunn): Over 21,000 schools in the United Kingdom have individually applied to be placed on the Board's standing list to receive the Board's special school poster reproductions and leaflets. Issues of this material are made three times a year to all schools who have applied. Schools in the Empire overseas who apply for copies of the Board's posters are not placed on the Board's standing list, since it is felt that any periodical issue of the kind made to schools in the United Kingdom would go beyond the terms of the Vote for Empire marketing. So far as stocks permit, however, they are provided with a selection of appropriate full-sized posters.

Mr. DAY: Can my hon. Friend say whether there are any schools not in the United Kingdom which are on the Board's list?

Mr. LUNN: I think I have answered this question fully. If any schools apply for the posters, they are supplied to them in every part of the Empire.

Mr. DAY: Have any applied?

Oral Answers to Questions — EMPIRE SETTLEMENT.

Captain P. MACD0NALD: 50.
asked the Secretary of State for Dominion Affairs whether he proposes to reduce the distress in this country through unemployment by encouraging settlement schemes in the Dominions; and, if so, whether he can make any statement respecting his plans in this respect?

Mr. LUNN: I can assure the hon. and gallant Member that it is contemplated that every aspect of the problem of oversea settlement should be discussed with the representatives of His Majesty's Governments in the Dominions at the forthcoming Imperial Conference.

Captain MACDONALD: Is this another matter on which the Government have no policy whatever at the present time?

Oral Answers to Questions — SCOTLAND.

GLASGOW CITY COUNCIL.

Mr. McGOVERN: 54.
asked the Lord Advocate what action he proposes to take in regard to the representations which have been made to him to set up a, judicial inquiry into the allegations of corrupt practices by members of the city council of Glasgow?

The LORD ADVOCATE (Mr. Craigie Aitchison): I have considered these representations, but have been unable to discover any ground on which I could advise that steps should be taken to have a tribunal of inquiry set up under the Tribunals of Inquiry (Evidence) Act, 1921.

Mr. McGOVERN: If I am able to place additional and important evidence of corrupt practices by members of the Glasgow City Council, in addition to the already conclusive evidence submitted by me and others, will the Lord Advocate undertake to tear himself away from the political influences which are operating, and set up a tribunal?

The LORD ADVOCATE: The insinuation in the hon. Member's supplementary question does not call for a reply, but may I say that the allegations which have been made hitherto have been of the vaguest and most nebulous kind. I have had them very fully and carefully inquired into by my Department, and they were found to be without a scintilla of evidence. The people who have been most vocal in agitating in this matter have declined to submit any evidence whatever to the Procurator-Fiscal, who is the proper official to investigate the matter. Let me just add that if the hon. Member has any evidence in his possession, I hope he will deem it to be
consistent with his duty to submit it forthwith to the Procurator-Fiscal, who, in due course, will report to me upon it.

Mr. McGOVERN: As the Lord Advocate has not given any undertaking to consider——

Mr. SPEAKER: I did not rise to call the hon. Member to order when putting his supplementary question because I thought it was a maiden effort on his part, but I cannot allow him to proceed in that way.

Mr. MAXTON: Arising out of the Lord Advocate's answer, is it the view that a Member of this House has no interest in clean government, and no right to put views before the House, but must proceed, as a member of the public, through the ordinary police channels?

The LORD ADVOCATE: I do not in any way object to considering representations that are made, but they must be specific. The hon. Gentleman does not seem to understand that before you can set up a tribunal under the Act of 1921 there must be a definite matter to be inquired into. Hitherto there has been no definite matter except in one respect where an inquiry was held, and there the specific allegation was shown to be absolutely without foundation.

Mr. MAXTON: Would the Lord Advocate be prepared to receive the hon. Member for Shettleston (Mr. McGovern) and myself to put the position before him again?

The LORD ADVOCATE: Certainly, but I think it would be much more satisfactory if the hon. Member reduced the allegations to writing and signed them.

Mr. McGOVERN: In view of the unsatisfactory reply, I give notice that I intend to raise this matter at the earliest opportunity on the Motion for the Adjournment.

EDUCATION.

Dr. HUNTER (for Mr. SCOTT): 51.
asked the Secretary of State for Scotland whether he is aware that in primary schools science, mechanics, bench work, cookery, laundry work, dressmaking, hessian-embroidery, cane and raffia work, leather work, ball making, and paper folding, etc., are regularly taught to
pupils under 12 or 14, many of whom have not passed the elementary qualifying examination; and whether he will take steps to eliminate or decrease the teaching of such subjects at least at earlier stages of the pupil's career so that the pupil's energies may be concentrated on the essential subjects of reading, writing, arithmetic, history, and geography?

The SECRETARY of STATE for SCOTLAND (Mr. William Adamson): I am aware that the subjects mentioned are taught to a number of pupils who have not passed the qualifying test. Some of these manual subjects form a valuable part of the training of the younger children. Others are appropriately included in the curriculum of older pupils whose aptitudes are not for book work. I have no reason to think that in either case an undue amount of time is given to these manual and practical subjects and, therefore, I do not feel that the change suggested in the last part of the question is called for.

Mr. SHEPHERD: Would not the right hon. Gentleman agree that this question is based upon an erroneous idea of the real purpose of the occupations mentioned in the question?

Dr. HUNTER (for Mr. SCOTT): 52.
asked the Secretary of State for Scotland whether he is aware that the simple qualifying test examination in primary schools (i.e., prior to senior advanced divisions or post-qualifying courses) is optional, and is conducted by an examining board composed usually of teachers and the executive officers; under how many authorities, and in how many schools in Scotland, no qualifying test examination is held; whether the teachers have the power to withhold or veto the qualifying test examination; whether that examination is unofficial or is recognised by the Department; and whether in the interests of both primary and advanced education, he will cause the qualifying test examination to be made compulsory upon all pupils, and have it made official and conducted under the supervision of His Majesty's inspectors of schools, and therefore uniform in character?

Mr. ADAMSON: I would refer the hon. Member to the reply given to his question of 6th June, 1930, to which I have nothing to add.

Dr. HUNTER (for Mr. SCOTT): 53.
asked the Secretary of State for Scotland whether, in order to ascertain the real position of elementary education in Scotland, he will state the gross number on the rolls of elementary schools with numbers in average attendance, the gross number in the qualifying class, the number of these who entered for the qualifying test, and the numbers who passed the qualifying test, adding numbers of non-entrants and exemptions; and whether he will give instructions that full information under these heads will be tabulated in future annual reports of the Committee of Council on Education in Scotland, so that by a comparison of the gross number in the qualifying class with the numbers who passed the qualifying test the real results of primary education may be obtained?

Mr. ADAMSON: The average number on the rolls of primary schools in Scotland in the year 1928–29 was 654,199, and the average attendance was 584,473. The information at my disposal is not sufficiently detailed to enable me to give the other figures asked for my the hon. Member. I will consider the suggestion made in the last part of the question, but I cannot accept the view that the real results of any form of education can be completely shown in statistical form.

Oral Answers to Questions — HOUSING.

FOREIGN BATHS.

Major COLVILLE: 55.
asked the Minister of Health if he will state if any considerable quantity of imported foreign baths is being used in State-aided housing schemes?

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Miss Lawrence): My right hon. Friend has no information on the point raised by the hon. and gallant Member.

Major COLVILLE: In view of the fact that some 70,000 foreign baths were imported into this country last year, does he not think that it would be practicable to insist that British articles should be used in State-aided houses?

Miss LAWRENCE: As I have repeatedly explained, my right hon. Friend has no power to order in this matter, but circulars of advice have been sent to the local authorities.

Major COLVILLE: Would it be practicable to seek powers in that matter to order the use of British materials?

NORTHAMPTON.

Mr. MALONE: 57.
asked the Minister of Health whether he is aware that house No. 4, court No. 2, Scarletwell Street, Northampton, has been reported to be in an insanitary condition, but no action has yet been taken by the Northampton Borough Council; and whether he will have an inquiry made into the condition of this and neighbouring houses and the reasons for delay?

Miss LAWRENCE: My right hon. Friend has no information in regard to this matter, but he is communicating with the Northampton Town Council as to it.

Oral Answers to Questions — URBAN DISTRICT COUNCILS.

Captain P. MACDONALD: 56.
asked the Minister of Health whether it is the intention of the Government to give effect to the recommendations contained in the final report of the Royal Commission on Local Government as regards the position and powers of urban district councils?

Miss LAWRENCE: These matters have received my right hon. Friend's consideration, but in view of the pressure of other business, he cannot promise legislation at the present time.

Oral Answers to Questions — POST OFFICE.

SORTING WORK, MOUNT PLEASANT.

Sir CYRIL COBB: 58.
asked the Postmaster-General whether he is aware of the proposal to transfer a large portion of the sorting work hitherto performed by sorters at the inland section of the General Post Office, Mount Pleasant, to a lower-paid grade; and what are the grounds for such dilution of labour in a Government Department?

The ASSISTANT POSTMASTER-GENERAL (Mr. Viant): The sorting work in question, of which it is proposed
to transfer only about 6 per cent. from sorters to postmen, is simple; it is performed almost wholly by postmen at other London sorting offices, and there is no reason for continuing the exceptional arrangement under which it is performed wholly by sorters at the inland section.

Oral Answers to Questions — DUMMY EXECUTIONS, BODMIN PRISON.

Mr. FOOT: 59.
asked the Secretary of State for the Home Department if he has received any protests against the exhibition of dummy executions at the disused Bodmin Prison; and if he will, in the sale of any prison premises in future, impose a restriction making these exhibitions impossible?

The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Mr. Short): Yes, Sir, representations have been made to my right hon. Friend about this undesirable exhibition, and on any future occasion of a sale of prison premises the hon. Member's suggestion will certainly be borne in mind.

Mr. HAYCOCK: If it is such a terrible thing to witness a dummy execution, how much more terrible it must be to witness a real execution!

Oral Answers to Questions — DELIVERY VANS (THEFTS).

Sir C. COBB: 60.
asked the Home Secretary the number of cases of theft from delivery vans in London during the last year; whether there has been an increase in this particular crime; and in how many cases during the last year convictions have been secured?

Mr. SHORT: The number of known cases of thefts from delivery vans during the year 1930 in the Metropolitan police district was 611, 24 more than in 1929. The number of convictions was 128.

Mr. MARCH: Can the Under-Secretary state how many vanguards were attached to the vans when the things were stolen?

Mr. SHORT: That question does not arise.

Oral Answers to Questions — ESTATE DUTIES.

Mr. WISE: 61.
asked the Chancellor of the Exchequer the total value of property,
specifying separately land and also the acreage thereof, accepted in satisfaction of Estate Duties under Section 56 of the Finance (1909–10) Act, 1910; and how much was accepted in the last year for which figures are available?

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence): I

Year.
Description.
Purchaser.
Price.









£
s.


One estate
1913
…
1 acre, 2 roods, 2 poles of land
…
County Council
…
193
10


1914
…
School houses and property
…
County Council
…
2,138
0



1915
…
Four houses
…
General Post Office
…
5,000
0

Oral Answers to Questions — OLD AGE PENSIONS.

Mr. L'ESTRANGE MALONE: 62.
asked the Chancellor of the Exchequer what is the estimated annual cost in each of the next 10 years of a temporary scheme to increase the old age pension at 65 to £1 for single persons and 30s. a week for married men, conditional on retirement from work, assuming that the whole cost is borne by the Government?

Mr. PETHICK-LAWRENCE: If the suggested extra pension were limited to insured persons who were over the age of 65 at the time the scheme came into operation, but were payable to all such persons who were available for work, whether then actually in employment or not, it is estimated, on reasonable assumptions as to the number of persons who would accept the conditions, that in the first year the scheme might add about £15,000,000 to the present cost of old age pensions. A considerable amount of labour would be involved in working out the figures for a series of years, but it is estimated that after 10 years the cost would have fallen to about £6,000,000. While continuing to diminish, it would not, however, disappear for at least another 20 years.

Sir B. FALLE: Is 30s. a week a living wage for old people?

Mr. SHEPHERD: Can my hon. Friend say what would be the net cost if the saving in unemployment benefit were deducted?

Mr. PETHICK-LAWRENCE: I am afraid I cannot give that figure out of

would refer my hon. Friend to my reply to the hon. Member for Devizes (Mr. Hurd) on 9th July, 1929, of which I am sending him a copy. No further land has been transferred under the arrangement since that date. As regards particulars of the property accepted, I will circulate these in the OFFICIAL REPORT.

Following are the particulars:

my head, but if my hon. Friend will put a question down, I will have the matter looked into.

Mr. BUCHANAN: Would not the hon. Gentleman consider bringing these poor old people up to a semi-human standard of life?

Oral Answers to Questions — CYPRUS (PRESS RESTRICTIONS).

Mr. BROCKWAY: 29.
asked the Under-Secretary of State for the Colonies what is the nature of the restrictions which have been placed upon the Press of Cyprus; and what is the reason for them?

Dr. SHIELS: The main feature of the the law regulating the Press recently enacted by the Cyprus Legislature is a provision that every newspaper proprietor must obtain a licence to publish from the Government, and must execute a bond in the sum of £200 for the payment of any penalty imposed upon him by the courts for seditious or other libel. The object of the Measure is, briefly, to provide against newspapers being conducted by irresponsible persons able to indulge in the publication of libellous articles for which they cannot effectively be made answerable.

Mr. HAYCOCK: On a point of Order. May we have that question answered again? We could not hear one word of the answer. It is in order for a Minister to speak in so low a tone that he cannot be heard?

Mr. SPEAKER: The hon. Member will see the answer in the OFFICIAL REPORT.

Oral Answers to Questions — ISLE OF MAN (CUSTOMS) (No. 2) BILL,

"to amend the law with respect to customs in the Isle of Man," presented by Mr. Pethick-Lawrence; to be read a Second time To-morrow, and to be printed. [Bill 221.]

MARRIED WOMEN TEACHERS (EMPLOYMENT).

Mr. HARRIS: I beg to move,
That leave be given to bring in a Bill to amend the Law with respect to the employment of married women teachers.
This is a short Bill the single purpose of which is that in future a woman teacher shall not be refused employment or dismissed merely on the ground that she is married or about to be married. It may be news to some Members of the House that, almost if not quite entirely since the War, the practice has grown up among local authorities of employing women who undertake to resign on marriage. We have had considerable experience of women as teachers, and anybody who has any knowledge of the schools knows the immense advantage of having a certain number of married women on the staff. That applies with great force to the infant departments of schools, but it equally applies to the girls' departments, especially in the older ages. The consideration that influences me more than anything else in a Bill of this kind is the well-being of the child. If I was convinced that education would benefit by a restriction of this character, I should not bother to introduce the Bill. Parents, to my knowledge, appreciate the fact that the care, training and education of their children at school is partly in the hands of married women. I am convinced that the education service would be the poorer if no married women were serving on the staff.
The full force of this new practice is only being felt to-day, because, of course, the older members of the staff were not required to give this undertaking and in the ordinary schools in many parts of the country there is still a very large percentage of married women, but now, after a fair number of years of this regulation, the serious position is being realised. The Board of Education has recognised that it is important to have
a certain number of married women amongst the teachers. Circular 1383, issued by the late President of the Board in 1925, page 9, paragraph 13, points out the great advantage of infant care being taught, preferably by married women. If the practice of not engaging married women and of requiring them to resign is persisted in, the opportunity of having their services will no longer exist.
On the top of that we have the proposals of the Hadow report, the basis of which is broadening the syllabus of the schools, which include, in the girls' departments, teaching cookery and housewifery. The great advantage of having amongst the teachers a certain number of women of practical experience in running a home is that they are able to guide the child, not merely from what they have read in books, but from what they have been taught by practical experience in their own homes, is obvious. Every educationist desires to get, in the teaching profession, the best qualified and most competent persons available. I am not suggesting that single women in many cases are not as competent as married women, but we want every variety and type in our schools, just as in this House we now have the advantage of women Members, though we are glad to have single women, on this side of the House, at any rate, three of the most distinguished Members are married women, the Noble Lady the Member for the Sutton Division of Plymouth (Viscountess Astor), the Noble Lady the Member for Southend (Lady Iveagh) and the Noble Lady the Member for Perthshire (Duchess of Atholl). The House would be the poorer if married women were barred from membership, and we want to remove that restriction from the teaching profession.
If ever there was a profession which is calling for women, it is the teaching profession. There are people who still believe in the old idea that the proper place for the woman is in the home. [Interruption.] I thought I should get a response. No doubt hon. Members do not like to see women entering into the great professions, such as medicine and law, but I think they would be the first to admit that teaching is a recognised calling for women. It is a profession in the highest sense which calls
for special gifts, and the great majority of women who enter it do so because they recognise that they have particular gifts in that direction. We say to those who enter the calling for which they are most suited, "If you marry, you will have to resign and your training and your years of study will be wasted." There are some people who think it is in the interest of economy, but I question very much if the case can be made good. It takes two or three years to train a teacher, usually at the national expense, and the cost is estimated at £400. If, automatically, when they marry, however efficient and capable they may be, they must resign, that money is largely lost to the State and to the community.
It is also argued that it is purely a matter for local authorities and that they must decide their own business, but 60 per cent. of the cost of teachers' salaries is borne by the State, and we are perfectly justified in having a say, as partners in the education of the child and in the provision of the money for the schools, as to how they should be staffed. Then there is the case of the convenience of the schools—the inconvenience of absences. I think there is a very simple answer to that. Eighty per cent. of the teachers automatically resign on marriage. It is only the enthuiasts, the most keen and the most competent, as a rule, who remain on, and it is for that small percentage that I am pleading in the interest of the teaching profession and, above all, of the schools. It is a great profession and, when we are calling for the assistance of married women to enable us to raise the school age, it seems a very seemly time to do away with this penalty on marriage in the most important profession that women can choose. I have not the slightest doubt that the House will permit me to introduce the Bill. It is a short Bill of two Clauses only, and I hope some day it will become an Act of Parliament.

Question put, and agreed to.

Bill ordered to be brought in by Mr. Harris, Mr. Simon, Viscountess Astor, Major Hills, Mr. Cove, Mr. Morley, Miss Rathbone, Sir Robert Newman, and Dr. Burgin.

MARRIED WOMEN TEACHERS (EMPLOYMENT) BILL,

"to amend the law with respect to the employment of married women teachers," presented accordingly, and read the First time; to be read a Second time upon Monday next, and to be printed. [Bill 222.]

MESSAGE FROM THE LORDS.

That they have agreed to—

Brighton and Hove Gas Bill, with Amendments.

That they have passed a Bill, intituled, "An Act to confirm and give effect to certain agreements entered into between the Government of the Dominion of Canada and the Governments of the Provinces of Manitoba, British Columbia, Albert, and Saskatchewan, respectively." [British North America Bill [Lords.]

BILLS REPORTED.

LLANELLY DISTRICT TBACTION BILL [Lords].

Reported, with Amendments; Report to lie upon the Table, and to be printed.

CLACTON-ON-SEA PIER BILL [Lords] (Certified Bill).

Reported, with Amendments; Report to lie upon the Table, and to be printed.

Bill, as amended, to be considered upon Monday next, pursuant to the Order of the House of 11th December.

SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE B.

Mr. Frederick Hall reported from the Committee of Selection; That they had discharged the following Member from Standing Committee B (added in respect of the Prevention of Corruption Bill): Viscount Wolmer; and had appointed in substitution: Lieut.-Colonel Gault.

Report to lie upon the Table.

Orders of the Day — FINANCE BILL.

Further considered in Committee. [Progress, 1st July.]

[Mr. DUNNICO in the Chair.]

POSTPONED CLAUSE 29.—(Estate Duty where property of deceased has been transferred to private company.)

The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden): I beg to move, in page 25, line 24, at the end, to insert the words "situate in Great Britain."
It was never intended that this Clause should apply to transferors of real estate abroad. Under the existing law, real property situate abroad is not liable to British Estate Duty, and it is not intended to bring such property within the purview of the Clause.

Amendment agreed to.

Mr. P. SNOWDEN: I beg to move, in page 25, line 25, after the first word "of," to insert the words "or of any interest in."
This is a drafting Amendment. The words of the Clause as drafted are not wide enough to include the operation of the transfer of an interest in settled property, in circumstances which would limit the purview of the Clause, and the amending words put the matter right.

Major COLFOX: It seems to me that the Amendment, as drafted, does not make sense. If this Amendment is inserted, as far as I can gather, it will read:
transfers of or of any interest in
Is that correct?

Mr. SNOWDEN: It is quite all right. Amendment agreed to.

Mr. SNOWDEN: I beg to move, in page 25, line 27, at the end, to insert the words:
(d) transfers of personal chattels not yielding income.
(e) transfers of property made to a company to which this Part of this Act applies in the capacity of trustee, factor, agent, receiver, or manager.
This Amendment may be regarded as a concession to the taxpayer. With regard
to paragraph (d), it excludes from the scope of the Clause transfers of property which do not produce income, such as pictures and the like. It is designed primarily to meet the case where some employé or person not in the service of the company happens to have transferred such property and receives payment from the company in connection with his employment or service. With regard to paragraph (e), the provision is to make it clear than transfers of property to any company made in the capacity of an agent are not covered by the Clause.

Sir LAMING WORTHINGTON-EVANS: I am glad that the Chancellor of the Exchequer has put in these Amendments. I rise only to say that you can hardly describe them as a concession to the taxpayer and thereby obtain merit. It is not a concession to the taxpayer; it is the correction of a mistake in the original drafting.

Major NATHAN: I wish to draw the attention of the Chancellor of the Exchequer to an ambiguity in the drafting of paragraph (e). The fault, if there be a fault, is mine, because paragraph (e) is in the terms of the Amendment which I and some of my hon. Friends put upon the Order Paper. I should like to express my appreciation to the Chancellor of the Exchequer for adopting that Amendment, but, as I have said, there is an ambiguity. The position is explained by the Amendment to the Amendment which I have pub upon the Paper, and which I will formally move if called upon to do so. It is not clear from the drafting whether the words "in the capacity of trustees," and so on are limited by the words "to a company to which this Part of this Act applies."

Mr. P. SNOWDEN: I may say, Mr. Dunnico, that if you call the Amendment of the hon. and gallant Member, I shall be prepared to accept it. I think it will remove any ambiguity there may possibly be.

The DEPUTY-CHAIRMAN: The hon. and gallant Member may move his Amendment.

Major NATHAN: I beg to move, as an Amendment to the proposed Amendment, in line 2, to leave out the words:
to a company to which this Part of this Act applies.

Amendment to the proposed Amendment agreed to.

Question proposed, "That those words, as amended, be there inserted."

4.0 p.m.

Mr. ATKINSON: I cannot help thinking that these words might be made clearer. I do not know to what "personal chattels not yielding income" refer. The expression is something very difficult to define. I do not know whether a personal chattel yields income of its own accord. Obviously, this is not intended to apply to machinery which is incidental to a business, because that matter is covered by an earlier part of the Clause. Therefore, it must be intended that it is to apply to separate assignments of personal chattels. Does a motor car, if it is used as a taxi-cab yield income? I suppose that it does. Does a racehorse yield an income? It usually causes a loss. Does it not depend entirely on the use to which personal chattels are put? The Chancellor of the Exchequer mentioned pictures. If pictures are exhibited, they yield income. When one tries to construe these words and to visualise cases to which they apply, one realises that anyone who has to do this sort of thing will be in very great difficulty. Almost any personal chattel can yield an income if it is hired out or used for exhibition purposes. I do not know what is in the mind of the Chancellor of the Exchequer. With regard to paragraph (e), I am very glad that the ambiguity, which also occurred to me, has been cleared up. May I take it that if the trustees under a will in which mine leases form part of an estate, are unable to work the leases themselves, and make a transfer, which otherwise would be hit by this Bill, to a company for the purposes of working the mine leases, they would not be excluded because the assignment is made by trustees in the course of their capacity as trustees? I am asking for information. Frankly I do not understand what sort of transactions the Chancellor of the Exchequer has in mind. I suppose that "factor" or "agent" means a factor or agent of a company? It surely cannot be the agent of the transferor Does it mean that if a transferor makes an assignment himself the transaction is hit, but if it is made by an agent on his behalf it is not hit?
Surely the Chancellor of the Exchequer cannot mean that? We would welcome the concession, but I feel sure that that is not what is meant. The same remark applies to the word "manager." Surely merely because he is managing for the transferor the transaction is not to be taken out of the Bill? The Chancellor of the Exchequer would be presenting a carriage and pair to everyone to drive through the Bill if the words meant that. Will the right hon. Gentleman tell us exactly what is meant, so that we can see whether his intention is being carried out by the Clause.

Major GEORGE DAVIES: I would draw the attention of the learned Attorney-General to one little matter in the wording which is perhaps an oversight. We have inserted a paragraph (e) which is to read:
transfers of property made.… in the capacity of trustee,
etc. Should it not be "transfers of property made by the persons acting in the capacity of trustee," etc., or some words of that sort?

The ATTORNEY-GENERAL (Sir William Jowitt): I am much obliged to the two hon. Gentlemen for their suggestions. In the light of their criticisms I think that the words of the Clause need a good deal of consideration. I will tell the Committee what we were intending to do by these words. In the course of the Debate we have had illustrations given of someone employed by a company who, for instance, gave a signed photograph or an armchair. We meant to take out that sort of thing. As I have said, the criticism of the wording suggests that it needs further consideration, and we shall see whether we can improve it. The observation of the hon. and gallant Member for Yeovil (Major Davies) seems to be most pertinent. What we meant was that if a, transfer is made by someone as trustee, so far as that trustee is concerned, if he dies or anything of that sort, it does not count at all; he was not the beneficiary at all and the transfer could be disregarded so far as he was concerned. But we do not disregard it so far as the beneficiary is concerned. If a beneficiary through a trustee makes a transfer, we mean by these words that the beneficiary ought to be caught. That was the intention of our words, but we shall see whether we
can get better words between now and Report stage.

Question, "That those words, as amended, be there inserted," put, and agreed to.

Sir ASSHETON POWNALL: I beg to move, in page 25, line 31, after the word "than," to insert the word "royalties."
There is the word "interest" in the Clause now, and we do not see why if concessions are made with regard to interest, similar concessions should not be made in the case where there is an interest arising directly from royalties.

Mr. P. SNOWDEN: We were not quite clear what, the hon. Member had in his mind in moving this Amendment. After the explanation of the hon. Member I think we might be prepared to accept the Amendment, with the qualification that it be left to us to find out what words are necessary to fulfil the hon. Member's purpose.

Amendment, by leave, withdrawn.

Amendments made: In page 25, line 31, leave out the words "bonâ fide."

In line 32, leave out the words "bonâ, fide."

After the word "on," insert the words "and repayments in respect of."—[Mr. P. Snowden.]

Mr. P. SNOWDEN: I beg to move, in page 25, line 33, after the word "company," to insert the words
and payments of or on account of purchase money under a bona fide sale where that purchase money is a capital sum of a fixed amount.
There is an Amendment on the Paper in the name of the right hon. Member for St. George's (Sir L. Worthington-Evans), but that will, of course, be covered by this Amendment.

Sir L. WORTHINGTON-EVANS: I had on the Paper an Amendment which seems to have disappeared, or perhaps it was taken off because of the Amendment of the Chancellor of the Exchequer. It was designed to cover exactly the same point, but in a different way.

Mr. SNOWDEN: I do not think the right hon. Gentleman will mind my saying that the Amendment I have moved is in the interest of the taxpayer. The Amendment of the right hon. Gentleman as it
stood originally on the Order Paper was to insert the words "repayment of." I have endeavoured in this Amendment to express the intention which he embodied in his own Amendment, and I think he now agrees that my Amendment correctly embodies the principle he wished to have included in the Bill.

Sir L. WORTHINGTON-EVANS: Yes, that is so. I am glad that the Chancellor has inserted this Amendment, not because it is a concession to the taxpayer——

Mr. SNOWDEN: I said it was in the interest of the taxpayer.

Sir L. WORTHINGTON-EVANS: Of course it is in the interest of the taxpayer that the Bill should be a reasonable Bill. This Amendment is making the Bill a little more reasonable, and on that account I am glad the Chancellor has moved the Amendment. Does he want the words "bona fide" in? He has been busy striking it out in other directions, and now he is putting it in again. I do not think he wants it.

Mr. SNOWDEN: In this case I am informed that it is necessary.

Major NATHAN: I do not propose to ask leave to move the Amendment which stands in my name in view of what took place last evening. It would be inconsistent with the attitude taken up by the Government, and I do not really attach much importance to it. I only rose because I think there is a mistake in the OFFICIAL REPORT, of yesterday. I moved an Amendment to the earlier part of this Clause and what I said is reported in column 1892. I asked the learned Attorney-General for an explanation of what he meant by "a capital sum of fixed amount." What was the subtle difference, I asked, between those words and other words used in the right hon. Gentleman's previous Amendment. As reported, the learned Attorney-General in his reply is made to say:
It is a principle of law to regard that as fixed which is able to be fixed.
and then
For that reason, rightly or wrongly, I and those who advise me have inserted the words in that form."—[OFFICIAL REPORT, 1st July, 1930; col. 1892, Vol. 240.]
In my recollection the learned Attorney-General did not use the words
"rightly or wrongly." It would be quite incompatible with the courtesy which he has shown throughout this debate for him to make a reply which would appear petulant, and as such it appears in the printed report. No one who followed the debate would believe that of the learned Attorney-General. What, in fact, happened was that he gave a quotation from the Latin. It probably sounded like "rightly or wrongly" to the reporter, and I merely rise to give the learned Attorney-General an opportunity of correcting what otherwise could only be regarded as an injustice to himself.

The ATTORNEY-GENERAL: I am very much obliged to the hon. and gallant Member. I had not looked at the OFFICIAL REPORT, but now he reminds me I see there is something in what he says. My recollection is somewhat hazy on the point.

Major NATHAN: May I suggest that, for the purposes of a record, the learned Attorney-General should repeat the quotation which he gave to the House.

The ATTORNEY-GENERAL: It is a test of my Latin as well as a test of my memory. To the best of my recollection the quotation was: Id certum est quod certum reddi potest.

Major DAVIES: May we have an explanation from the Chancellor or the Attorney-General as to the whys and wherefores of the inclusion of the words "bona fide"? Quite good reasons were brought forward why it should be dropped in the early part of the Clause, and we have now got it again in this Amendment. The Chancellor says he is informed that there are good reasons why it is necessary, but we have had no reasons. I should like to know if he can give us the reasons why he has included the words in this Amendment, or whether it is an oversight of the printer or the draftsman.

The ATTORNEY-GENERAL: I have looked into this matter. I find that the Finance Act, 1894, uses the words "bona fide" very often. It talks about "bona fide sales" and so on. When you speak of a bona fide sale, at least one understands what it means, but when applied to bona fide dividends, or bona fide interest, it is difficult to see what it does mean. As far as the Finance Acts of
1894 and 1900 are concerned, we are simply following precedent.

Sir L. WORTHINGTON-EVANS: In admitting the words "bona fide sale" are we opening the door to an inquiry into the amount of consideration which is received as a result of the sale? It is obvious that the sale might be said to be not bona fide if £500,000 worth of goods were sold for £5. It is obviously wrong.

The ATTORNEY-GENERAL: I agree.

Sir L. WORTHINGTON-EVANS: Then you are opening the door to an inquiry. You may think that the payment of 50 per cent. of the worth makes a sale a bona fide sale, whereas with 49 per cent. the sale is not bona, fide. We have got rid of the words elsewhere. For example, it is just as possible to argue about bona fide interest. Supposing the rate of interest were 10 per cent. Is it bona fide supposing it were 2 per cent.? What is bona fide? Are you going to judge by the market? It is exactly the same thing as a sale. Bona fide dividend is rather another thing, because that implies action taken by the directors. Bona fide interest and bona fide sale are on exactly the same footing. I do suggest that the Chancellor should drop the words.

Mr. SMITHERS: I want to add a word to what my hon. Friend has just said, and to point out that the matter goes a bit wider. When there is a question between the parties as to the fixing of interest or where a dividend is declared by a board of directors, these firm matters of contract, and if the revenue authorities can come along at the death of a person and say, "Was this bona fide interest or bona fide dividend?" then it seems to me that that official of the Crown would be coming along to break a contract arrived at between two parties. That is really going to be quite serious. I agree with my right hon. Friend that there is no difference between bona fide interest and bona fide sale, and that the Chancellor or the learned Attorney-General might see their way to withdraw the words "bona fide," which, I think, are more serious than the right hon. Gentleman seemed to imagine.

Mr. P. SNOWDEN: I hesitate to intervene in a discussion between lawyers. Might I point out as a justification for keeping in the words "bona fide" that
the relation of these words to the rest of the Clause has been considered, and their retention is, I think, quite consistent.

Major HILLS: May I add one word to what my right hon. Friend has said? The words "bona fide" have received different interpretation on different occasions in the Courts. There was a case, under the Act of 1894, of a "bona fide sale or purchase." The learned Attorney-General will recollect the decision. When you come to a bona fide sale, quite different rules of interpretation are employed, and you go beyond the mere fact of the man being on the spot. You have to prove that the man was not only actually there and bona fide present, but that he was there in good faith for making exercise and not for the purpose of getting a benefit. I think it is rather a dangerous word to use. I do not think it really helps the Government at all.

Mr. W. S. MORRISON: May I ask the Chancellor of the Exchequer a question? This Amendment and the other that preceded it have been redefining the benefits that it is desirable to exclude, and three Amendments out of four that have been put down by myself and hon. Members associated with me have been accepted by the right hon. Gentleman. The other Amendment, also designed for the same object, was not called by you when we were on page 2713 of the Amendment Paper. I should like to ask the right hon. Gentleman whether he considers that his new Clause, which makes three out of four Amendments, also meets that point of mine about "full consideration"? If it is not met by the right hon. Gentleman, we shall have to ask leave to raise it on the Report stage. Perhaps the reason is the same reason why you did not call the other three, namely, that the case had been met by the right hon. Gentleman in his concessions. I should like to ask the right hon. Gentleman whether he considers accepting that one or not.

The DEPUTY-CHAIRMAN: The right hon. Gentleman may, of course, answer the hon. Member if he wishes, but the proper place to raise matters contained in Amendments not selected is upon the Question, "That the Clause stand part of the Bill."

Amendment agreed to.

Sir A. STEEL-MAITLAND: I do not propose to move the Amendment which stands in my name—in page 25, line 33, at end, insert the words "or remuneration for genuine services rendered to the company"—as the Chancellor of the Exchequer states that he is considering the matter with a view to the question being dealt with on Report.

Mr. SNOWDEN: I beg to move, in page 25, line 35, to leave out the words "and for the purposes of this Section," and to insert instead thereof the words:
(3) In ascertaining for the purposes of this section the value of a benefit—

(a) In the case of a benefit consisting of a payment, a deduction shall be made in respect of any Income Tax (other than Sur-tax) paid or borne by the deceased in respect of that payment; and
(b)"

Mr. RAMSBOTHAM: I beg to move, as an Amendment to the proposed Amendment, to leave out the words "(other than Sur-tax)."
I move the Amendment to the proposed Amendment with the object of finding out what the Chancellor of the Exchequer has in his mind in seeking to put these words into the Clause. I presume that if "Income Tax" was left by itself the phrase would include Sur-tax; therefore he puts in the words "other than Sur-tax" in order to prevent Surtax being deducted for the purposes of benefit. It is obvious that from the point of view of the Inland Revenue the larger the benefit and the smaller the income of the company the larger will be the sum by way of Estate Duty which will have to be paid. There may be a danger of double taxation arising here, because the Chancellor of the Exchequer allows Income Tax to be deducted but refuses to allow Sur-tax to be deducted, presumably because the recipient of the benefit in this case might enjoy a large income from other sources and might thus be able by the deduction of Sur-tax as well as Income Tax to reduce the benefit to very small proportions.
But when it comes to estimating the amount which has to be paid in Estate Duty, I understand that the amount is aggregated with other sums that he possessed. Whereas on the one hand the Inland Revenue get the benefit of aggregation, they refuse to allow the estate of the deceased to have the benefit of
deduction with respect to Sur-tax. It seems to me that the Treasury are having the best of the bargain both ways. They are producing a Clause which will take the maximum of the deceased's property by way of aggregation and not allow him by way of computing his benefit to aggregate Income Tax and Sur-tax paid upon it.

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence): If the hon. Member will consider the Amendment fully he will see that the words in the Chancellor of the Exchequer's Amendment are correct. In this Clause we are dealing with the question of proportion, a proportion represented on the one hand by the income received by an individual in the shape of benefit, and on the other hand by the income of a company in the shape of profits. The income received by the company in the shape of profits is to be reduced by Income Tax at the standard rate, and it is reasonable, therefore, that when you want to find the proportion received in benefit by the individual you should allow the individual to deduct Income Tax at the standard rate from the benefits that he receives from the company. In that way you are comparing like with like. If in addition to that you allow the individual also to deduct Sur-tax you would not get a true proportion, and where you were dealing with a very wealthy individual whose Sur-tax is very considerable you would be invalidating the provision that only if he obtains as much as 50 per cent. in the shape of benefit it comes within the provisions of this Clause. In certain cases that would vitiate the Clause, in effect raise the percentage to 75 per cent. or even more. What we are doing is perfectly fair. For the purpose of computing the proportion we deduct Income Tax at the standard rate from the profits of the company, and, therefore, you allow the individual to deduct Income Tax at the standard rate from the benefits that he receives.

Mr. TURTON: I do not think that the explanation of the Financial Secretary quite covers the whole point of the Amendment to the proposed Amendment. It is true that for the purpose of the fraction you must deduct a like amount from the numerator and the denominator,
but there is a third point, that of adjudicating as to what amount of money is deemed to come in the benefit. So far as I understand the Clause, it is an honest attempt to find out exactly how much the tax dodger is dodging the tax and how much money has gone into his pocket which ought to have gone into the coffers of the Exchequer. If we leave the Clause with the Chancellor of the Exchequer's proposed Amendment and without my hon. Friend's Amendment to the proposed Amendment, we shall be leaving the tax dodger or rather the company to pay duty according to a fractional proportion that includes in the numerator not only the benefit that the tax dodger kept in his pocket but also on the benefit that the Chancellor of the Exchequer has already received in the form of Sur-tax. Therefore, I should desire to leave out the words "other than Sur-tax" in order that that which the tax dodger has already paid to the Exchequer should not be leviable in any other form on the company on the death of the tax dodger.

Mr. PETHICK-LAWRENCE: The hon. Member is under a misapprehension. The only way that the amount of the benefit comes in is in the proportion.

Major HILLS: Surely the whole Clause is governed by the first words, "In ascertaining for the purposes of this Section the value of the benefit." What is the value of the benefit? Surely the value of the benefit is the value less tax, the net value that the receiver of the benefit gets. I think that that is what the Government have in mind—that in computing the value of the benefit the payment should be taken to be the net and not the gross value. I think that is common justice, and I do not think it would open the door to any tax dodging if we omit the words "other than Surtax" here.

Mr. ARTHUR MICHAEL SAMUEL: Is it not a fact that the individual has paid the Surtax although the company has not, and that therefore the Exchequer has it in its pocket. It must give credit for that payment in some form or another, or it must take it into account. Is it taken into account?

Amendment to the proposed Amendment negatived.

Proposed words there inserted.

Mr. SNOWDEN: I beg to move, in page 25, line 38, at the end, to insert the words "due allowance being made in respect of any rent paid by the deceased."
I do not think there will be any complaint with respect to the insertion of these words.

Mr. ATKINSON: Would the right hon. Gentleman consider inserting some words to cover other obligations that are undertaken? In many cases the tenant, besides paying rent, undertakes very onerous duties, such as repairs, painting, maintenance and the like. If it is right to make an allowance in respect of money paid in the form of rent, why is it not right to make an allowance in respect of other obligations which may impose a greater burden than the rent? The Amendment, as it is, does not cover all the ground which should be covered or which is intended to be covered.

Mr. SNOWDEN: I do not think I can accept an Amendment so wide as that indicated by the hon. and learned Member. The phrase "other obligations" may mean anything and would open the door to a great deal of evasion. When the rent is fixed these "other obligations" are taken into consideration.

Viscount WOLMER: Will the right hon. Gentleman undertake to look into this matter between now and Report? Obviously a rent paid under a non-repairing lease is very different in value from a rent paid under a repairing lease.

Amendment agreed to.

Sir L. WORTHINGTON-EVANS: I beg to move, in page 26, to leave out the words from the word "year," in line 6, to the end of the Sub-section.
I am moving this Amendment in order to put a question to the Chancellor of the Exchequer. I want the right hon. Gentleman to say whether he is intending to enlarge the three years governing gifts inter vivos; to vary, in fact, the present law, because the result of having the accounting year, which is not a calendar year, may mean, and possibly does mean, that in certain cases there will be three years or three and three-quarter calendar years; the accounting year will not correspond to the calendar year. The Amendment would, of course, really destroy the Clause
as it is framed. I have never had an opportunity of raising this point before. It cannot be done by an Amendment because it would mean redrafting the whole Clause, but almost by a side wind you are destroying the three years of the inter vivos gift. If it is a benefit given more than three years before the testator's death, it is not subject to duty, but by the arrangement of your accounting years, which do not correspond with the calendar years, it may be that a benefit accruing more than three years back, in the fourth year, which happens to be one of the accounting years is interfered with. I ask that this point shall be considered, and, if it is desired to extend beyond the three years, that some appropriate words should be put in so that the person taxed shall have an opportunity of stopping at three years rather than three accounting years.

The ATTORNEY-GENERAL: The answer to the right hon. Member for St. George's (Sir L. Worthington-Evans) is this: It is not the intention of the Clause to enlarge by a single day the period of three years which governs gifts of inter vivos. Nor do I think that the Clause as drafted does any such thing. For a particular company you take a period of time, three years, or three and three-quarter years, and you compare the benefit with the period. Then you do your sum on the assets of the company. I do not think the Clause in any way touches the question of inter vivos gifts. It is not intended to do so. I myself raised this point and discussed it with my advisers and we are satisfied that the Clause does not do so.

Sir L. WORTHINGTON-EVANS: I am much obliged to the learned Attorney-General. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Sir A. STEEL-MAITLAND: I beg to move, in page 26, line 9, after the word "of," to insert the words:

"(i) any sum paid by way of interest on mortgages or bonds secured upon lands or buildings belonging to the company or any part of them;
(ii) any expenditure upon the repairs or upkeep of such lands and buildings;
(iii) interest on money lent to the company;
(iv) dividends on preference shares;"
(v)

This Sub-section is one of the most confusing of a rather difficult Clause, and if I am correct, it may as it stands create great hardships which have not been intended. The Attorney-General yesterday said that if there was a risk of hardship being inflicted on innocent people in a Clause which sets out to deal with those who are not innocent, those risks should be reduced to a minimum, and it is from that point of view that I ask the Chancellor of the Exchequer to consider this Sub-section. The fact that there is a good deal of confusion will regard to the definition of "total income" is due to the wording of this Clause. It may be quite necessary, but the wording has given rise to a very natural misconception. The Clause refers to "total income for any accounting year." It says:
In ascertaining for the purposes of this section the total income for any accounting year of a company, the income of the company from any source
The very fact that that phrase is used has led a number of those who have been construing this Bill to think that what really is in question is some matter with regard to liability to Income Tax, and consequently they judged the suitability of other deductions or additions to the phrase "total income" from the point of view of liability to income-tax. The term "total income" in this case is used as a method of measurement, or what is commonly called a yard-stick, for determining whether the benefit reserved by the transferor is excessive or not. What you do is to take the amount of benefit reserved by the transferor, divide it by the amount of the total income. Then, according to the fraction, which is now 50 per cent. after the concession made by the Chancellor of the Exchequer yesterday, if the fraction exceeds 50 per cent. then, as far as this Bill is concerned, if the other qualifications are satisfied, liability exists. It is quite obvious that if total income is a figure which is used as a divisor the more you reduce that figure the more certain you make if that any benefit may exceed 50 per cent. of it. The figure represented by the total income may, by the deductions proposed, be reduced to nothing at all, and whatever benefit is received would certainly be more than 50 per cent. of that amount.
I think I know the reason why those who have been responsible for framing
this Clause have used these words. It is that they may by deducting money which is ear-marked for certain purposes like debenture interest arrive at the free distributable pool, i.e., the fund which is free to be collared by the transferor and applied to himself for the purposes of annual benefit. What in fact the Government are doing is to make certain quite arbitrary deductions from income in the sense in which we usually know it. They deduct any money that is used on account of interest on debentures, and of interest on loans, and, not only that, all dividends on preference shares. If the Attorney-General adheres to this definition of total income he gets a unit of measurement, a yardstick, which may produce absolutely unfair results in the legitimate case and does not catch the tax dodger who pursues means which are at present legitimate, but which quite rightly the Government want to stop. Finally, you may arrive at the perfectly absurd result that in the case of two transferors, each with an estate of precisely the same value, with benefits precisely the same, one gets caught and the other does not, according to the way they arrange the capitalisation of the company, although the capitalisation of the company does not affect the merits of the case one bit.
It is a very intricate question and therefore let me give the reasons for my conclusions. Take the deductions we have made. Under the Clause there is to be deducted the whole of the interest on debentures, the whole of the interest on loans and the whole of the dividends on preference shares. Take an ordinary estate company in land, exactly the kind of company which the Attorney-General quite properly wishes to deal with, one which is tax dodging. What happens in a perfectly typical case? You may get an estate with quite a good and considerable rent roll, but one which is fairly heavily mortgaged. The interest on the mortgage is a very heavy deduction from the gross rental.
5.0 p.m.
You may then have debentures which amount perhaps to half of the true capitalisation and there are deductions for the interest on debentures. There are further deductions for the interest on any preference shares, and, in a number of cases, the effect of these deductions may well be that the actual free income left, the
distributable pool, the amount which should be distributed in dividends on ordinary shares, might, even if no benefits were reserved, be quite inconsiderable. It might under certain conditions not exist at all. I take definite cases. At the present time on agricultural estates there is a heavy expenditure on upkeep and repairs. Even though it is a good many years since the War, a number of estates are, as yet, only getting abreast of repairs which had to be left in abeyance during the War. At the same time there have been very unfavourable and indeed disastrous seasons for agriculture. Abatements are given to tenants on their rents, and all these abatements, though each may be quite a small amount compared to the gross rental, have to be deducted in globo from the very small amount which remains for distribution as dividend on ordinary shares. The amount of the total income, after all deductions, in quite a number of cases, when we try to arrive at it by means of the definitions in this Clause, may be nothing at all, or in any case quite an inconsiderable amount.
What is going to happen as regards benefit? There are certain perfectly legitimate benefits, that is to say, payments which may be reserved by the transferor. I am not going to argue the case of legitimate consideration for services rendered, because I understand that the Chancellor of the Exchequer is considering whether something cannot be done to meet that case. I only say in passing that anyone who is anxious for landowners to reside on their estates and not to be absentee landlords, should wish them to take an active interest in the management of their estates, and, if they do so, it is as legitimate for them to receive payment from the estate company as it is for the business man who transfers, let us say, his textile mill to a company, to act as managing director and receive a salary for his services. Quite apart from that question of remuneration—though it adds force to my argument—there are other legitimate benefits. I am not going to enumerate them in detail, but that there are such legitimate benefits is shown by the fact that the Chancellor of the Exchequer and the Attorney-General were both willing to allow a certain percentage in this respect
before what I will call the apparatus against the tax dodger comes into play. If the amount of income is so arbitrarily reduced to vanishing point, then any benefit at all is more than the income, because, in fact, the income may be nothing at all. But the whole of the pains and penalties with regard to excessive benefit would in such cases begin to apply.
On the other hand, supposing that you want in the future to get at the tax-dodger, it is quite possible that with this definition of annual income, you will not catch him if he is wise enough when he makes an estate company not to create any debentures or preference shares but only ordinary shares so that, after the payment of mortgage interest or anything of that kind, the whole of the income after payment of repairs, etc., is available merely for dividends on ordinary shares. In that case it would be quite possible for him to retain an amount of benefit which is really excessive, and yet at the same time he would not be caught by this Clause at all. The whole framework of this Clause makes it very difficult to find a good yard-stick, but if you use the term "total income" then I think you ought to put in the items which are suggested in the Amendment. If that were done, then I think it would be fair not to have a fraction of 50 per cent. or 40 per cent. or even 30 per cent. I think 20 per cent. would possibly be quite ample and that it would be better to have a much smaller percentage on a sum which is a larger and truer representation of what ought to govern these considerations. As things are, two estates of the same size and value may be transferred to estate companies formed for the purpose, and the amount of benefit may be precisely the same in each case. But if one person creates debentures and preference shares, the interest or dividends on which are deducted, he may be caught, whereas if the other only creates ordinary shares, he will slip through these provisions. One will be caught, the other will not be caught, although the circumstances and the benefit received are precisely the same in all respects.

Major NATHAN: This is a very odd Sub-section. It begins by stating that the rules applicable to the computation
of profits shall be the rules contained in the Income Tax Acts and it then proceeds, for some 20 lines, to point out that of all rules those of the Income Tax Acts are the very rules which are not to apply. By the time any accountant has framed the accounts of a company in accordance with the provisions of this Sub-section there will be very little of the Income Tax Acts left. To begin with, it is not even to be in respect of the period prescribed by the Income Tax Acts. Then, under paragraph (a)—on the hypothesis of the Government as to benefit being remuneration for services—it is specifically declared that just that sum is not to be deducted from profits which, under the Income Tax Acts, would be deducted from profits, while under paragraph (b) just those things which under the Income Tax Acts would not be deducted from profits, are to be deducted. For the first time, I believe, in any legislation in this country, and contrary to the findings of the Colwyn Committee, and contrary to statements made, I think, by the Chancellor of the Exchequer himself and certainly by other Members of the Government, to the effect that Income Tax is not a charge upon profits—for the first time, as I say, in our legislation, it is made a charge upon profits by this Clause in the sense that it is to be deducted from the amount of profits ascertained under the Income Tax Acts, before the conventional and artificial income provided by this Clause is ascertained at all. Then there are questions like those of interest on money and dividends on preference shares.

The DEPUTY-CHAIRMAN: I would point out to the hon. and gallant Member that we are not now discussing paragraph (b) of the Sub-section, which refers to dividends on preference shares. The Amendment relates to paragraph (a). One does not wish to apply any unnecessary restraints or limitations to the discussion of these matters, but there are other Amendments on the Paper relating to paragraph (b), and we must try to keep the discussion as far as possible to the Amendment now before the Committee.

Major NATHAN: It is scarcely necessary for me to say that I should be very unwilling to transgress your Ruling, Mr. Dunnico, but may I direct attention to the wording of the Amendment. The
words upon my lips when you called me to order were "dividends on preference shares," and those are the very words of the Amendment. Indeed, the Amendment—not in the technical sense, it is true, but in the broad sense, is, as regards the details to which I am referring a direct negative to line 21 of paragraph (b). It is very difficult, and I am not sure that it is not impossible to deal with the Amendment without also referring to that part of the Sub-section to which it is directed and which it must necessarily affect.

The DEPUTY-CHAIRMAN: As I say, I do not want unduly to interfere with the discretion of hon. Members in these discussions. I must point out, however, that there are other Amendments on the Paper dealing with paragraph (b). Of course if it is understood that we are now discussing that paragraph generally on this Amendment, and that the discussion will not be repeated when we come to the other Amendments, I do not mind allowing it in order to expedite our proceedings.

Major NATHAN: I think I can deal with the matter without even appearing to do what is quite contrary to my intention, namely, to infringe your Ruling, Mr. Dunnico. I direct attention solely to the words of the Amendment and there I find that the right hon. Gentleman the Member for Tamworth (Sir A. Steel-Maitland) suggests that dividends on preference shares should not be deducted from the amount of the profits. That is the point with which I was previously dealing. The right hon. Gentleman pointed out that Sub-section (3) defines the measure whereby is to be tested the question of liability or non-liability and it is extraordinarily important that nothing should be permitted as deduction from profits which, in the ordinary way, an honest man in the conduct of his business would not deduct from his profits. It is a legitimate assumption, that the vast majority of those entering into transactions with the 100,000 companies and the £1,500,000,000 of capital coming within the provisions of this Measure—a very startling figure—it must, I say, be assumed that those conducting business with that vast number of companies—by far the greatest number in this country—and that vast amount of capital, are
doing so honestly. Yet a person who entered into a transaction which was perfectly legitimate and honest at the time when it was entered into, which remained by all the tests of the Bill a perfectly legitimate and honest transaction up to, let us say, a year before his death, might be stigmatised as a tax evader coming under the provisions of this Bill, partly because the profits of the company in which he was interested might in the ordinary way of business have diminished, and partly because there was an entirely artificial deduction made from those profits, which by no possible means could he have anticipated.
I will take the case of dividends on preference shares as a very striking example. Such dividends are dividends which may or may not be paid. It is entirely in the discretion of the directors of a company whether a dividend on a preference share be paid or be passed, and it seems a very odd situation that a man's or a company's liability under this Bill should depend upon something which is so casual, so unpredictable, and so incalculable as the decision, at some future date, of a board of directors as to whether it will pay or pass a preference dividend. If it pays a preference dividend, then, unless the Amendment is adopted, the profits will be reduced and the risk of liability increased. If, on the other hand, instead of paying a preference dividend, the dividend is passed and the amount which might have been distributed by way of dividend is instead placed to reserve, then the assets and the profits of the company are increased for the purposes of this Bill and the liability which otherwise would have existed does not come into operation at all. Surely, by means of this or some other Amendment, steps ought to be taken which will make it possible for a taxpayer to know beforehand, by some objective test, whether or not he will be liable, and it should not be left to the casual discretion of a board of directors as to whether the liability shall or shall not arise.

Mr. ATKINSON: I urge that this Amendment is worthy of very serious consideration. You want to get in some way at the value of the retained benefits for the purpose of guiding you as to the proportion of the company's assets upon
which you are going to levy the duty, and the method that has been chosen is to say, Let us see what proportion the retained benefits bear to the income of the company. That can only be a fair test if you use "income" in the sense of "earnings." You want really to get at what proportion the benefits paid to the transferor bear to the earnings of the company, because it only throws light on the proportion of assets that ought to be taxed if you are considering what proportion that bears to earnings. Obviously, the question of what a company does with its earnings is wholly irrelevant. The only sense in which it is fair at all is to take, on the one side, the retained benefits and, on the other, the earnings, and that surely ought to be quite irrespective of what the company chooses to do with those earnings. You may have managing directors who get a percentage on the profits of the company. Those profits are always calculated as the earnings of the company; the proportion or percentage which the manager is to get is not to be varied by what the company chooses to do with its earnings, so that the real thing one ought to have in mind is the earnings of the company, and one should put altogether on one side the objects to which they choose to apply those earnings.
Take the question of dividends on preference shares. Surely, in any sense of the word "income," that which you distribute in dividends is part of the income. The deduction of dividends on preference shares is giving a wholly fictitious meaning to the expression "income." To say that whether or not a transaction is to come within this Bill depends upon whether or not a company pays a preference dividend is saying something which has no sense or reason behind it, and I suggest that there ought to be no question about deducting dividends on preference shares. Let us go to the next most obvious item, namely:
any expenditure upon the repairs or upkeep of such lands and buildings.
How can it be fair to deduct that? It comes out of income. The company is free to spend much or little as it likes. What would be the position of a company if it had a managing director or some servant enjoying some benefits who might be thought to be going to die in one of die next three years? It would not dare to spend a penny on repairs for
fear that it might bring the transaction within this Clause, and it would be very chary about what it spent. When you want to lay down tests as to the kind of transaction you want to get at, to introduce fortuitous circumstances in this way is really making the whole thing much more artificial than it need be. It is wholly wrong to deduct from this fictitious in come of a company expenditure upon the repairs or upkeep of land and buildings.
As to those two items, I should have thought there was a fairly obvious case, but now let us take "interest on money lent to the company." Why should that be deducted from, the earnings? It has been earned or made by the company in the same way as any other part of its income. What does it matter that it pays interest on money lent or on mortgages secured on the property? Here again you have income on the one side, and you ought not to consider what is done with that income any more in the case of a company than you would consider what is done with his benefit by the receiver of the benefit. You do not take any interest, in that benefit once he has received it. To introduce all these fortuitous circumstances, really dependent upon what the company does with its income, is to make this a wholly artificial and unfair comparison.

The ATTORNEY-GENERAL: I cannot help thinking that the hon. and learned Member for Altrincham (Mr. Atkinson) has rather misconceived the intention of the Clause, and it is misleading to talk about the income of a company in the way he suggested. I cannot complain of it being said that it is to a certain extent an artificial criterion that is set up in the Clause, but our intention is to get at what I may call the free income, the income available for distribution, and then see how much of that the deceased gets. That surely is the framework of the Clause and what we ought to aim at. That is implicit in the whole framework of this Clause, and we want to compare the benefits which the deceased gets with, on the other hand, that fund of money which is available to pay him benefits. If you are going to compare those two things, you obviously should take off those charges which may regard as prior charges, fixed charges, charges which have to be made, such as interest on debentures and
interest on preference shares, which for this purpose are money which does not fall within the distributable pool, and preference shares have to be paid before any dividend is available on ordinary shares. [Interruption.] We say in the Clause that you must deduct interest on money lent to the company. Before you can get money available for ordinary shares—and for this purpose we may regard the ordinary shareholders as the proprietors of the company—the company has to pay interest on money lent to it, and it has to pay dividends on preference shares, and then, and then only, does a sum of money become available for the ordinary shareholder.

Sir A. STEEL-MAITLAND: The hon. and learned Gentleman's line of argument seems perfectly logical, but it has no relation to the facts in relation to which one of these companies is formed. If the transferor is a managing director with a salary, and he employs no paid agent, that salary should be paid before any preference dividends are paid out, just as much as before any ordinary dividends are paid out. Indeed when you remember that it is a question of choice in this case whether the debentures are created or not, it is right and proper that the salary should be considered as part of the ordinary expenses and not related to any distributable pool, which, from this point of view, is an idea which is not applicable to the circumstances of the case.

The ATTORNEY-GENERAL: The right hon. Gentleman is rather traversing the ground which he indicated in a previous Amendment, which he did not move because my right hon. Friend the Chancellor of the Exchequer said it would have his consideration; that is to say, as to how far he could go in meeting the right hon. Gentleman in seeing whether benefits should exclude salary in return for genuine services rendered. That is rather a different point, and I am afraid I cannot go further than to explain the framework of the Clause. It seems to me that this thing is implicit in the Clause. Hon. and right hon. Members opposite have said that our Clause is all wrong and unworkable, though I notice with interest that nobody at present has suggested any better way of wording it. It may be that we cannot stop up this gap, and, if so, it is very
deplorable, but personally I think this Clause will do it.
It is implicit in this Clause that you should compare two things, namely, the benefits which the individual gets and the income of the company. We must compare the benefits which the individual gets with that fund which is available to pay the benefits to him, to see what proportion of the available sums he gets. You cannot treat as available for paying benefits sums which have to be paid to somebody who lends him money. That is not a benefit at all, so we say we will adopt this yardstick, and start by referring to the income, and we say, "You are to arrive at it, and deduct from it certain things, which I agree are purely arbitrary from the point of view of the Income Tax law, but are essential if what you are trying to determine are not merely earnings of the company,, but something which is of benefit to those who can be regarded as the proprietors of the company." It is for that reason that we have inserted these words, and that we cannot accept this Amendment; it is for that reason, too, that my right hon. Friend the Chancellor of the Exchequer made the concession which he did yesterday in extending the 30 per cent. to 50 per cent., so that the 50 per cent. of the available fund has to be paid to the transferor before he comes in the Clause at all.
This Clause does not apply to transfers of ordinary businesses; it applies to transfers of estates, whether agricultural, landed, or building estates, and it has this peculiarity, that whereas the ordinary company might have a very prosperous year one year, and an unfortunate year the next, by subjecting it to any given period of three years, you can get a fair index of the true position of the company, and the sort of company with which we are dealing does not jump about so violently from year to year. It may be, as the Noble Lord the Member for Aldershot (Viscount Wolmer) suggested last night, a position of always living in a state of perpetual gloom, but the point I am making is that it is perpetual; it is not vast prosperity one year and terrible gloom the next. You do get more or less standard and stable conditions. In these circumstances, I suggest that we
have done the right and sensible thing in comparing the benefit which the individual gets with the fund which is available to pay the benefit, that is to say, the fund diminished by those prior claims which, first of all, have to be met before you can pay any benefit.

Viscount WOLMER: I ask the Attorney-General to consider the position in which the Government are putting these agricultural estate companies. It comes to this, that the more they pay on the upkeep of their farms, on the repair of fences and the upkeep of the esate, the greater the liability, and almost the certainty that they will be subjected to penal taxation on the death of the chief proprietor. The Attorney-General pointed out that these agricultural companies are in certain respects in a different position from ordinary commercial companies, in that they are not subject to booms and slumps. That may be perfectly true, but I will tell him another respect in which they are in a different position. They spend on repairs a far greater proportion of their income than ordinary private commercial companies do. That was the point which I attempted to make last night. The Government say that the less agricultural estates spend on repairs, the more money the chief proprietor will be able to take out of that company without rendering his affairs liable to penal taxation; that is a strong incentive to the agricultural estate companies to cut down their estate maintenance and repairs to a degree which would be very injurious to the agricultural welfare of the community. I wish I could persuade the hon. and learned Gentleman that this is not merely a case of tax-dodging. I do not know if he has ever had the administration of an agricultural estate; if he has, he will know the truth of what I say. Everybody who deals with agricultural land at the present time finds that they charge very low rents, and that they have to spend a very high proportion of those rents on maintenance and repairs.
Let me take another point in regard to this Amendment. The Attorney-General will not allow us to treat the interest on loans in the way that we have asked. Consider the position in which an agricultural estate company is placed in that matter. Suppose there is some improvement on the estate, which it is desirable
to carry out in the interests of the tenants and of the whole estate. They may borrow £10,000 to effect an irrigation or drainage system, or any other work of that sort, which will add to the income of the estate. The chief proprietor will be able to see his way to do that, for he says: "I shall have to pay £500 a year in interest, but I shall get back out of this improvement of the estate £600 or £700 a year." The transaction will pay the company, and it will benefit the estate and everybody who lives on the estate. Then the Government come down and say, "This £500 a year which you have to pay in interest on borrowed money must not be calculated as part of the earning power of the estate, and what profit you make after having paid that interest is to be calculated as a benefit that you have got." So the result of the transaction would be that the principal proprietor would be drawing out a somewhat bigger sum than he was previously drawing out, and the total income of the estate which would be raised by this improvement cannot be calculated without comparing the relative size of the benefit to the income of the estate; so it will be a deterrent to landed estate companies to borrow money in order to improve their estates. Therefore, on this Clause the Government are doing everything they can to discourage landed estate companies from keeping their estates in proper repair, and from borrowing money in order to improve the value of their estates.

Mr. TURTON: The Attorney, General has given an explanation covering to some extent paragraph (i) and even paragraph (iii) of this Amendment, but, so far as I understand the explanation, it does not cover paragraph (ii) and paragraph (iv). His explanation is that we are here comparing the benefit which the deceased has received with the fund of money available for distribution, and he explained that further by saying that to obtain that we must deduct prior payments which have to be made. Any payments on repairs and upkeep of lands and buildings are not prior payments that have to be made; they are payments you can decide to make in any one year or not. During a war or at times such as these, there is no question that there are fewer repairs done now than in times of boom, because there is no money
available. That is a deplorable fact. It is not a prior payment that has to be made. If the Government stick to these deductions the result will be that when the transferor is old, when there is doubt of survival, repairs and expenses of upkeep will not be undertaken, and in the other case preference share dividends will not be declared. You are not going to gain one penny by this, because the tax-dodger has an open road by which he can take a short cut round you; but you are going to do a great deal of damage to the agricultural interest if you do not allow the repair-and upkeep to be undertaken.

Sir A. STEEL-MAITLAND: May I put some further considerations before the Attorney-General? His whole conception is wrong for this reason, that he is misled by the circumstances which are the natural circumstances of an ordinary settled industrial company, whereas he ought to be considering what are in fact, for practical purposes the quite different circumstances of a landed estate which is made into a company, and which the creator of that company can alter as he wishes. It is a fundamentally wrong conception. The landowner who transfers his estate to a company can make the available income within large margins whatever he wishes. He can, if this definition is to stand, make the available income quite large, or he can reduce it to nothing. It is not as if you were dealing with an ordinary industrial company which is loaded up with £1,000,000 worth of debentures. You have to consider that here is the proprietor of an estate making a company, who can create either debentures, preference shares or ordinary shares, and therefore, to say that you must only consider the income after debenture interest is paid or after preference dividend is paid—to say that you must take that income as your yardstick is misconceiving the whole situation. Although he has great knowledge of ordinary companies, he has not, I feel, put himself quite into the position of the proprietor of a landed estate, who creates an estate company.
The right hon. Gentleman has said that no one has suggested an alternative. I think there is a possible alternative, but it is difficult. The moment you try to catch evasion it becomes an extraordinarily
difficult task, and in any case it is very difficult to get any unit of measurement which is entirely satisfactory for all purposes. I think, however, we could get something much more satisfactory if we arrived at the figure of the earnings of an estate company—got those defined—and then allowed a much smaller fraction of those for benefit than is to be allowed with "total income" as defined by this Clause. I think that is an alternative. At the moment, I cannot say precisely how the earnings should be decided for this purpose, but think it ought to be possible to reach a definition. Then we should get a yard stick based upon the realities of the case.
I think the Attorney-General has misconceived the case. He has said that as compared with an ordinary company the income of an estate company does not vary greatly, and because of that we may have a fraction of 30 per cent. or 50 per cent. and it may be fair. That is where he is wrong. The earnings of an estate company do vary, I do not say greatly, but they may vary substantially according to whether there are a large number or a small number of repairs undertaken in a year, or whether rents may or may not be remitted in a given year. There is not an enormous variation in the gross earnings of an estate company, but, on the other hand, when it comes to free available income, under his definition, then the variations from year to year are considerable. You may change one year from a total income, for this purpose, of £200 of profit available for distribution in ordinary dividend's, or £1,000 available for distribution, to an actual

deficit next year. That is perfectly easy. Therefore, when the Chancellor of the Exchequer accepted 50 per cent. instead of 30 per cent. I could not express gratitude, because I think under certain circumstances that fraction is unreal. It is unreal because we are measuring it by available income, which is itself unreal. The right hon. Gentleman has asked for an alternative, and I think we could get a valid alternative based upon the earnings of the company; and then, I think, by fixing a much smaller fraction of those earnings, he would really fulfil his intention of catching the tax dodgers whilst not being unfair to the other parties who received legitimate benefit.

Mr. SMITHERS: I was called away suddenly just now, but there is one point which I wish to put very shortly. I wish to ask the Attorney-General if he cannot grant some concession on paragraph (ii) of the Amendment, which refers to expenditure on the repairs or upkeep of land and buildings. I am a farmer myself and I have many friends farming in a big way in the farming districts. When visiting them lately I have seen the terrible condition of some of those large estates, on which beautiful buildings are falling into disuse and disrepair. Could not the right hon. Gentleman, by accepting even this small part of the Amendment, do something to encourage the maintenance of farm buildings? I beg him to consider that point. It is a most sincere appeal that I am making.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 129; Noes, 265.

Division No. 399.]
AYES.
[5.57 p.m.


Acland-Troyte, Lieut.-Colonel
Colfox, Major William Philip
Galbraith, J. F. W.


Albery, Irving James
Colman, N. C. D.
Gault, Lieut.-Col. Andrew Hamilton


Allen, Sir J. Sandeman (Liverp'l., W.)
Courthope, Colonel Sir G. L.
Glyn, Major R. G. C.


Atholl, Duchess of
Cranbourne, Viscount
Gower, Sir Robert


Atkinson, C.
Croft, Brigadier-General Sir H.
Graham, Fergus (Cumberland, N.)


Baillie-Hamilton, Hon. Charles W.
Crookshank, Capt. H. C.
Grattan-Doyle, Sir N.


Balniel, Lord
Croom-Johnson, R. P.
Greaves-Lord, Sir Walter


Berry, Sir George
Culverwell, C. T. (Bristol, West)
Gretton, Colonel Rt. Hon. John


Betterton, Sir Henry B.
Cunliffe-Lister, Rt. Hon. Sir Philip
Guinness, Rt. Hon. Walter E.


Bevan, S. J. (Holborn)
Dalrymple-White, Lt.-Col. Sir Godfrey
Hacking, Rt. Hon. Douglas H.


Bourne, Captain Robert Croft.
Davies, Dr. Vernon
Hall, Lieut.-Col. Sir F. (Dulwich)


Bowater, Col. Sir T. Vansittart
Davies, Maj. Geo. F. (Somerset, Yeovil)
Harvey, Major S. E. (Devon, Totnes)


Bracken, B.
Davison, Sir W. H. (Kensington, S.)
Haslam, Henry C.


Brass, Captain Sir William
Dixon, Captain Rt. Hon. Herbert
Henderson, Capt. R. R. (Oxf'd, Henley)


Brown, Col. D. C. (N'th'l'd., Hexham)
Duckworth, G. A. V.
Hennessy, Major Sir G. R. J.


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Dugdale, Capt. T. L.
Herbert, Sir Dennis (Hertford)


Bullock, Captain Malcolm
Eden, Captain Anthony
Hills, Major Rt. Hon. John Waller


Cadogan, Major Hon. Edward
Edmondson, Major A. J.
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.


Cayzer, Sir C. (Chester, City)
Elliot, Major Walter E.
Hurd, Percy A.


Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)
Erskine, Lord (Somerset, Weston-s. M.)
Hurst, Sir Gerald B.


Chamberlain, Rt. Hon. N. (Edgbaston)
Falle, Sir Bertram G.
Jones, Sir G. W. H. (Stoke New'gton)


Christie, J. A.
Fermoy, Lord
King, Commodore Rt. Hon. Henry D.


Cobb, Sir Cyril
Fielden, E. B.
Lamb, Sir J. Q.


Cockerill, Brig.-General Sir George
Fremantle, Lieut.-Colonel Francis E.
Locker-Lampson, Rt. Hon. Godfrey


Locker-Lampson, Com. O. (Handsw'th)
Ramsbotham, H.
Stuart, Hon. J. (Moray and Nairn)


Long, Major Eric
Rawson, Sir Cooper
Sueter, Rear-Admiral M. F.


Lymington, viscount
Reid, David D. (County Down)
Thomson, Sir F.


Macdonald, Capt. P. D. (I. of W.)
Rentoul, Sir Gervals S.
Turton, Robert Hugh


Margesson, Captain H. D.
Roberts, Sir Samuel (Ecclesall)
Vaughan Morgan, Sir Kenyon


Merriman, Sir F. Boyd
Rodd, Rt. Hon. Sir James Rennell
Ward, Lieut.-Col. Sir A. Lambert


Mitchell-Thomson, Rt. Hon. Sir W.
Ruggles-Brise, Lieut.-Colonel E. A.
Wardlaw-Milne, J. S.


Monsell, Eyres, Com. Rt. Hon. Sir B.
Russell, Alexander West (Tynemouth)
Warrender, Sir Victor


Moore, Sir Newton J. (Richmond)
Salmon, Major I.
Waterhouse, Captain Charles


Moore, Lieut.-Colonel T. C. R. (Ayr)
Samuel, A. M. (Surrey, Farnham)
Wayland, Sir William A.


Morrison, W. S. (Glos., Cirencester)
Sandeman, Sir N. Stewart
Wilson, G. H. A. (Cambridge U.)


Newton, Sir D. G. C. (Cambridge)
Sassoon, Rt. Hon. Sir Philip A. G. D.
Windsor-Clive, Lieut.-Colonel George


Nirholson, Col. Rt. Hn. W. G. (Ptrsf'ld)
Savery, S. S.
Winterton, Rt. Hon. Earl


O'Connor, T. J.
Smith, Louis W. (Sheffield, Hallam)
Wolmer, Rt. Hon. Viscount


O'Neill, Sir H.
Smith, R. W. (Aberd'n & Kinc'dine, C.)
Womersley, W. J.


Ormsby-Gore, Rt. Hon. William
Smith-Carington, Neville W.
Wood, Rt. Hon. Sir Kingsley


Peaks, Captain Osbert
Smithers, Waldron
Worthington-Evans, Rt. Hon. Sir L.


Percy, Lord Eustace (Hastings)
Spender-Clay, Colonel H.



Pliditch, Sir Philip
Stanley, Lord (Fylde)
TELLERS FOR THE AYES.—


Pownall, Sir Assheton
Steel-Maitland, Rt. Hon. Sir Arthur
Major the Marquess of Titchfie and Captain Wallace.


NOES.


Adamson, W. M. (Staff., Cannock)
England, Colonel A.
Lansbury, Rt. Hon. George


Addison, Rt. Hon. Dr. Christopher
Evans, Capt. Ernest (Welsh Univer.)
Lathan, G.


Aitchison, Rt. Hon. Craigie M.
Foot, Isaac
Law, A. (Rossendale)


Alexander, Rt. Hon. A. V. (Hillsbro')
Gardner, B. W. (West Ham, Upton)
Lawrence, Susan


Alpass, J. H.
Gardner, J. P. (Hammersmith, N.)
Lawrie, Hugh Hartley (Stalybridge)


Ammon, Charles George
George, Rt. Hon. D. Lloyd (Car'vn)
Lawson, John James


Arnott, John
George, Megan Lloyd (Anglesea)
Lawther, W. (Barnard Castle)


Aske, Sir Robert
Gibbins, Joseph
Leach, W.


Attlee, Clement Richard
Gibson, H. M. (Lancs, Mossley)
Lee, Frank (Derby, N. E.)


Ayles, Walter
Gill, T. H.
Lee, Jennie (Lanark, Northern)


Baker, John (Wolverhampton, Bilston)
Glassey, A. E.
Lees, J.


Baldwin, Oliver (Dudley)
Gossling, A. G.
Lewis, T. (Southampton)


Barr, James
Gould, F.
Lloyd, C. Ellis


Batey, Joseph
Graham, D. M. (Lanark, Hamilton)
Logan, David Gilbert


Bellamy, Albert
Graham, Rt. Hon. Wm. (Edin., Cent.)
Longbottom, A. W.


Benn, Rt. Hon. Wedgwood
Gray, Milner
Longden, F.


Bennett, Capt. Sir E. N. (Cardiff C.)
Grenfell, D. R. (Glamorgan)
Lowth, Thomas


Bennett, William (Battersea, South)
Griffiths, T. (Monmouth, Pontypool)
Lunn, William


Benson, G.
Groves, Thomas E.
Macdonald, Gordon (Ince)


Bentham, Dr. Ethel
Grundy, Thomas W.
MacDonald, Rt. Hon. J. R. (Seaham)


Bevan, Aneurin (Ebbw Vale)
Hall, F. (York, W. R., Normanton)
MacDonald, Malcolm (Bassetlaw)


Blindell, James
Hall, G. H. (Merthyr Tydvil)
McElwee, A.


Bowen, J. W.
Hamilton, Mary Agnes (Blackburn)
McEntee, V. L.


Bowerman, Rt. Hon. Charles W.
Hardie, George D.
McGovern, J. (Glasgow, Shettleston)


Brockway, A. Fenner
Harris, Percy A.
McKinlay, A.


Brooke, W.
Hartshorn, Rt. Hon. Vernon
MacLaren, Andrew


Brothers, M.
Hastings, Dr. Somerville
Maclean, Sir Donald (Cornwall, N.)


Brown, C. W. E. (Notts, Mansfield)
Haycock, A. W.
Maclean, Neil (Glasgow, Govan)


Brown, Ernest (Leith)
Hayes, John Henry
MacNeill-Weir, L.


Brown, Rt. Hon. J. (South Ayrshire)
Henderson, Ht. Hon. A. (Burnley)
McShane, John James


Brown, W. J. (Wolverhampton, West)
Henderson, Arthur, Junr. (Cardiff, S.)
Malone, C. L'Estrange (N'thampton)


Buchanan, G.
Henderson, Thomas (Glasgow)
Mansfield, W.


Burgess, F. G.
Henderson, W. W. (Middx., Enfield)
March, S.


Buxton, C. R. (Yorks, W. R. Elland)
Harriotts, J.
Marcus, M.


Caine, Derwent Hall-
Hirst, G. H. (York W. R. Wentworth)
Markham, S. F.


Cameron, A. G.
Hirst, W. (Bradford, South)
Marley, J.


Cape, Thomas
Hoffman, P. C.
Marshall, Fred


Charleton, H. C.
Hollins, A.
Mathers, George


Chater, Daniel
Horrabin, J. F.
Matters, L. W.


Church, Major A. G.
Hudson, James H. (Huddersfield)
Maxton, James


Clarke, J. S.
Hunter, Dr. Joseph
Messer, Fred


Cluse, W. S.
Hutchison, Maj.-Gen. Sir R.
Millar, J. D.


Cocks, Frederick Seymour
Isaacs, George
Milner, Major J.


Compton, Joseph
Jenkins, W. (Glamorgan, Neath)
Montague, Frederick


Cove, William G.
John, William (Rhondda, West)
Morley, Ralph


Cowan, D. M.
Johnston, Thomas
Morris, Rhys Hopkins


Daggar, George
Jones, F. Llewellyn- (Flint)
Morris-Jones, Dr. J. H. (Denbigh)


Dallas, George
Jones, Henry Haydn (Merioneth)
Morrison, Herbert (Hackney, South)


Dalton, Hugh
Jones, J. J. (West Ham, Silvertown)
Morrison, Robert C. (Tottenham, N.)


Davies, E. C. (Montgomery)
Jones, Rt. Hon. Leif (Camborne)
Mort, D. L.


Day, Harry
Jones, Morgan (Caerphilly)
Moses, J. J. H.


Dickson, T.
Jones, T. I. Mardy (Pontypridd)
Mosley, Sir Oswald (Smethwick)


Dukes, C,
Jowett, Rt. Hon. F. W.
Muff, G.


Duncan, Charles
Jowitt, Rt. Hon. Sir W. A.
Muggeridge, H. T.


Ede, James Chuter
Kelly, W. T.
Murnin, Hugh


Edge, Sir William
Kennedy, Thomas
Nathan, Major H. L.


Edmunds, J. E.
Kinley, J.
Naylor, T. E.


Edwards, C. (Monmonth, Bedwellty)
Kirkwood, D.
Newman, Sir R. H. S. D. L. (Exeter)


Edwards, E. (Morpeth)
Knight, Holford
Noel Baker, P. J.


Egan, W. H.
Lambert, Rt. Hon. George (S. Molton)
Owen, Major G. (Carnarvon)


Elmley, Viscount
Lang, Gordon
Owen, H. F. (Hereford)




Palin, John Henry
Shepherd Arthur Lewis
Vaughan, D. J.


Paling, Wilfrid
Sherwood, G. H.
Viant, S. P.


Palmer, E. T.
Shield, George William
Walker, J.


Perry, S. F.
Shiels, Dr. Drummond
Wallace, H. W.


Pethick-Lawrence, F. W.
Shillaker, J. F.
Wallhead, Richard C.


Phillips, Dr. Marion
Shinwell, E.
Walters, Rt. Hon. Sir J. Tudor


Pole, Major D. G.
Short, Alfred (Wednesbury)
Watkins, F. C.


Potts, John S.
Simmons, C. J.
Watson, W. M. (Dunfermline)


Price, M. P.
Sinclair, Sir A. (Caithness)
Watts-Morgan, Lt.-Col. D. (Rhondda)


Quibell, D. J. K.
Sinkinson, George
Wellock, Wilfred


Ramsay, T. B. Wilson
Sitch, Charles H.
Welsh, James (Paisley)


Raynes, W. R.
Smith, Ben (Bermondsey, Rotherhithe)
Welsh, James C. (Coatbridge)


Richards, R.
Smith, Frank (Nuneaton)
West, F. R.


Richardson, R. (Houghton-le-Spring)
Smith, H. B. Lees- (Keighley)
Westwood, Joseph


Riley, Ben (Dewsbury)
Smith, Tom (Pontefract)
White, H. G.


Ritson, J.
Snell, Harry
Whiteley, Wilfrid (Birm., Ladywood)


Roberts, Rt. Hen. F. O. (W. Bromwich)
Snowden, Rt. Hon. Philip
Williams, David (Swansea, East)


Rosbotham, D. S. T.
Snowden, Thomas (Accrington)
Williams, Dr. J. H. (Llanelly)


Rowson, Guy
Sorensen, R.
Wilson, C. H. (Sheffield, Attercliffe)


Russell Richard John (Eddisbury)
Stamford, Thomas W.
Wilson, J. (Oldham)


Salter, Dr. Alfred
Stephen, Campbell
Wilson, R. J. (Jarrow)


Samuel, Rt. Hon. Sir H. (Darwen)
Stewart, J. (St. Rollox)
Winterton, G. E. (Leicester, Loughb'gh)


Sanders, W. S.
Strachey, E. J. St. Loe
Wise, E. F.


Sandham, E.
Sullivan, J.
Wood, Major McKenzie (Banff)


Sawyer, G. F.
Sutton, J. E.
Wright, W. (Rutherglen)


Scrymgeour, E.
Thomas, Rt. Hon. J. H. (Derby)



Scurr, John
Thurtle, Ernest
TELLERS FOR THE NOES.—


Sexton, James
Tinker, John Joseph
Mr. Allen Parkinson and Mr. William Whiteley.


Shaw, Rt. Hon. Thomas (Preston)
Townend, A. E.

Amendments made: In page 26, line 12, leave out the words "bona fide."

In line 13, leave out the words "bona fide."—[Mr. P. Snowden.]

Sir L. WORTHINGTON-EVANS: I beg to move, in page 26, line 31, to leave cut from the word "year" to the end of the Sub-section, and to insert instead thereof the words:
take the last year for which the accounts have been made up as those of the accounting year.
I had a conversation on this point with the Attorney-General, and he told me that it was not the intention of the Government to enlarge the period of three years from the date of death which governs gifts inter vivos. I would like to know whether the Clause does not provide for that. The prescribed period is defined by the Act to commence within three years before the end of the accounting year, and that may be 3¾ years before the death of the transferor. Take the case of £50,000 transferred to a private company. If that sum was transferred more than three years before the death took place, there would be no duty payable, but if the £50,000 were transferred, and during 3¾ years a benefit was received, the duty would attach. Therefore, I suggest that the Bill is extending by three-quarters of a year the period during which a charge may take place, notwithstanding the avowed intention of the Government not to alter the three years' rule. I ask the Attorney-General to reconsider the state-
ment which he made earlier to-day, and I trust that he will give an undertaking to make the Bill in accordance with the expressed intention of the Government.

The ATTORNEY-GENERAL: We are dealing with totally different things. In the first place, a three years' period has to elapse, and secondly there is an arbitrary period which you take for the working out of the proportions. It seems to me that it is more fair to take the three years' period in order to work out the proportions, and I am sure that that course is not against the interest of the taxpayers. If I am right in thinking that the two things are more or less the same, who is going to benefit by what is now proposed? I will certainly promise to read again the observations which the right hon. Gentleman the Member for St. George's (Sir L. Worthington-Evans) made on the previous occasion, and I will go into the matter. I must adhere to what I have said that it is not our intention to alter the three years' period.

Sir BOYD MERRIMAN: I should like the Attorney-General to appreciate that this point is not connected with taking a merely arbitrary period. The prescribed period is the period within which a gift operates, and I am afraid what is proposed would forbid a transaction of that kind. The prescribed period is definite with reference to the accounting period, and therefore the prescribed period may be thrown back to 3¾ years. Supposing that 3¾ years before the man's death he has transferred the property for less than
a full consideration, and at the same time has received a benefit. Apart from that being within the prescribed period, that would not be an offending transaction, because it would be outside the three years before his death; but because the man has received a benefit with reference to the accounting period, it becomes an offending transaction for the reasons which have been pointed out. In these circumstances I hope that the Attorney-General will reconsider the answer which he has given.

Sir L. WORTHINGTON-EVANS: I beg to ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Brigadier-General CLIFTON BROWN: I beg to move, in page 27, line 19, at the end, to add the words:
Provided that in the case of persons dying after the passing of this Act no period before the commencement of this Act shall be deemed to be within the prescribed period.
The Chancellor of the Exchequer has already made concessions on the average of the three years, and therefore the Treasury would be doing very little more by accepting this Amendment. This kind of retrospective legislation is very hard on the people who have paid very heavy duties in the past, and have added a great deal to the Treasury returns.

The ATTORNEY-GENERAL: I must take exception to the use of the word "retrospective" in regard to this Clause. Supposing a regulation was made that anybody who served in the Boer War was to be allowed to pay half the rate of Income Tax, obviously that would not be retrospective legislation. The liability would be fixed in the same way as in the past, and this is a complete misuse of the word "retrospective." We do not apply this provision to the death of any person if it takes place before the passing of the Act, and, therefore, I cannot see how the phrase "retrospective legislation" can be used. I do not think this Amendment is logical, and it is not very clear.
The principle of all these Finance Acts has been, and has rightly been, to look at the date of death after the Act, notwithstanding that the liability which then accrues may be affected by things which have taken place before. In this particular
case there is this additional point. Some years ago, I think in 1927 or 1928, the then Chancellor of the Exchequer, the right hon. Gentleman the Member for Epping (Mr. Churchill), forecast that this very legislation would come. It has been anticipated for a long time that it would come, and I do not doubt, strange though it may seem to say it, that, had the right hon. Gentleman the Member for Epping remained Chancellor of the Exchequer, he would have introduced some Clause in very much the same form as this.
The hon. and gallant Member's Amendment would not work. The test ought to be the death of the person on whose estate Estate Duty is claimed, and if, within a period of three years prior to his death, he received these benefits, then I think, logically, the Clause ought to apply. If he has not received the benefits, no doubt it does not apply. I do not think there is any logical ground for saying that, in the case of persons dying after the passing of the Act, no period before the commencement of the Act shall be deemed to be within the prescribed period. That would simply postpone the operation of the Act for some further time. I regret to say that we cannot accept the Amendment.

Colonel Sir GEORGE COURTHOPE: I hope that the Attorney-General is not going to stick to the attitude that he has just taken up. Surely, what he wants to do is to stop an evasion which has taken place perfectly legally in the past. It may have been undesirable, but the law has allowed it, and it has been taking place quite openly and legally, though not without considerable cost. The Treasury has taken its toll. It is true that it has been in another form, and probably a smaller toll, but the Treasury has taken a considerable toll in Stamp Duty. Many of the so-called tax evaders have, at considerabe personal sacrifice, taken this course in the hope of retaining, it may be, some historic estate in the possession of the family which has possessed it for centuries, and the necessary money has been raised to carry through the transaction. It has been done quite openly and legally, and I do not think that it is unfair of my hon. and gallant Friend the Member for Newbury (Brigadier-General Brown) to describe the Clause as it now stands as retrospective legislation. Therefore, I urge
the Attorney-General and the Financial Secretary to consider again whether they will not be serving the purpose which they have at heart, of stopping evasion, by saying that what has been done legally in the past may not be done legally any longer, and that for the future the gap of evasion will be stopped. It is quite certain that after the passing of the Act no more of these estate companies will be formed for this purpose of

evasion, in so far as they have been formed for the purpose of evasion in the past. Though it is true that the period on which the calculation will be made will not be retrospective, I think that as an act of justice this Amendment should be accepted.

Question put, "That those words be there added."

The Committee divided: Ayes, 125; Noes, 265.

Division No. 400.]
AYES.
[6.19 p.m.


Acland-Troyte, Lieut.-Colonel
Eden, Captain Anthony
O'Connor, T. J.


Albery, Irving James
Edmondson, Major A. J.
O'Neill, Sir H.


Allen, Sir J. Sandeman (Liverp'l., W.)
Elliot, Major Walter E.
Ormsby-Gore, Rt. Hon. William


Astor, viscountess
Erskine, Lord (Somerset, Weston-s-M.)
Peake, Capt. Osbert


Atholl, Duchess of
Falle, Sir Bertram G.
Percy, Lord Eustace (Hastings)


Atkinson, C.
Fermoy, Lord
Ramsbotham, H.


Baillie-Hamilton, Hon. Charles W.
Ford, Sir P. J.
Rawson, Sir Cooper


Balfour, George (Hampstead)
Fremantle, Lieut.-Colonel Francis E.
Reid, David D. (County Down)


Balniel, Lord
Ganzoni, Sir John
Rentoul, Sir Gervais S.


Berry, Sir George
Gauit, Lieut.-Col. Andrew Hamilton
Roberts, Sir Samuel (Ecclesall)


Betterton, Sir Henry B.
Gibson, C. G. (Pudsey & Otley)
Rodd, Rt. Hon. Sir James Rennell


Bevan, S. J. (Holborn)
Glyn, Major R. G. C.
Ruggles-Brise, Lieut.-Colonel E. A.


Bourne, Captain Robert Croft
Gower, Sir Robert
Russell, Alexander West (Tynemouth)


Bowater, Col. Sir T. Vansittart
Graham, Fergus (Cumberland, N.)
Salmon, Major I.


Bracken, B.
Grattan-Doyle, Sir N.
Samuel, A. M. (Surrey, Farnham)


Braithwaite, Major A. N.
Greaves-Lord, Sir Walter
Sandeman, Sir N. Stewart


Brass, Captain Sir William
Gretton, Colonel Rt. Hon. John
Smith, Louis W. (Sheffield, Hallam)


Briscoe, Richard George
Guinness, Rt. Hon. Walter E.
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Brown, Col. D. C. (N'th'l'd., Hexham)
Hacking, Rt. Hon. Douglas H.
Smith-Carington, Neville W.


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Hall, Lieut. Col. Sir F. (Dulwich)
Smithers, Waldron


Buchan, John
Harvey, Major S. E. (Devon, Totnes)
Spender-Clay, Colonel H.


Cadogan, Major Hon. Edward
Haslam, Henry C.
Stanley, Lord (Fylde)


Cayzer, Sir C. (Chester. City)
Henderson, Capt. R. R. (Oxt'd, Henley)
Sueter, Rear-Admiral M. F.


Chadwick, Capt. Sir Robert Burton
Hennessy, Major Sir G. R. J.
Train, J.


Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)
Herbert, Sir Dennis (Hertford)
Turton, Robert Hugh


Chamberlain, Rt. Hon. N. (Edgbaston)
Hills, Major Rt. Hon. John Walter
Vaughan-Morgan, Sir Kenyon


Christie, J. A.
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Wallace, Capt. D. E. (Hornsey)


Colfox, Major William Philip
Hurd, Percy A.
Ward, Lieut.-Col. Sir A. Lambert


Colville, Major D. J.
Jones, Sir G. W. H. (Stoke New'gton)
Wardlaw-Milne, J. S.


Courthope, Colonel Sir G. L.
King, Commodore Rt. Hon. Henry D.
Warrender, Sir Victor


Cranborne, Viscount
Lamb, Sir J. Q.
Waterhouse, Captain Charles


Croft, Briqadier-General Sir H.
Lane Fox, Col. Rt. Hon. George R.
Wayland, Sir William A.


Crookshank, Capt. H. C.
Locker, Lampson, Rt. Hon. Godfrey
Wilson, G. H. A. (Cambridge U.)


Croom-Johnson, R. P.
Lymington, Viscount
Windsor-Clive, Lieut.-Colonel George


Culverwell, C. T. (Bristol, West)
Macdonald, Capt. P. D. (I. of W.)
Winterton, Rt. Hon. Earl


Cunliffe-Lister, Rt. Hon. Sir Philip
Margesson, Captain H. D.
Wolmer, Rt. Hon. Viscount


Dalrymple-White, Lt.-Col. Sir Godfrey
Merriman, Sir F. Boyd
Womersley, W. J.


Davies, Dr. Vernon
Mitchell-Thomson, Rt. Hon. Sir W.
Wood, Rt. Hon. Sir Kingsley


Davies, Maj. Geo. F. (Somerset, Yeovil)
Monsell, Eyres, Com. Rt. Hon. Sir B.
Worthington-Evans, Rt. Hon. Sir L.


Davison, Sir W. H. (Kensington, S.)
Moore, Sir Newton J. (Richmond)



Dixon, Captain Rt. Hon. Herbert
Morrison, W. S. (Glos., Cirencester)
TELLERS FOR THE AYES.—


Duckworth, G. A. V.
Newton, Sir D. G. C. (Cambridge)
Sir Frederick Thomson and Major


Dugdale, Capt. T. L.
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)
the Marquess of Titchfield.


NOES.


Adamson, Rt. Hon. W. (Fife, West)
Bennett, William (Battersea, South)
Caine, Derwent Hall-


Adamson, W. M. (Staff., Cannock)
Benson, G.
Cameron, A. G.


Addison, Rt. Hon. Dr. Christopher
Bentham, Dr. Ethel
Cape, Thomas


Aitchison, Rt. Hon. Craigie M.
Bevan, Aneurin (Ebbw Vale)
Charleton, H. C.


Alexander, Rt. Hon. A. V. (Hillsbro')
Blindell, James
Chater, Daniel


Alpass, J. H.
Bondfield, Rt. Hon. Margaret
Church, Major A. G.


Ammon, Charles George
Bowen, J. W.
Clarke, J. S.


Arnott, John
Bowerman, Rt. Hon. Charles W.
Cluse, W. S.


Aske, Sir Robert
Brockway, A. Fenner
Clynes, Rt. Hon. John R.


Attlee, Clement Richard
Brooke, W.
Cocks, Frederick Seymour


Ayles, Walter
Brothers, M.
Compton, Joseph


Baker, John (Wotverhampton, Bilston)
Brown, C. W. E. (Notts, Mansfield)
Cove, William G.


Baldwin, Oliver (Dudley)
Brown, Ernest (Leith)
Cowan, D. M.


Barr, James
Brown, Rt. Hon. J. (South Ayrshire)
Daggar, George


Batey, Joseph
Brown, W. S. (Wolverhampton, West)
Dallas, George


Bellamy, Albert
Buchanan, G.
Dalton, Hugh


Benn, Rt. Hon. Wedgwood
Burgess, F. G.
Davies, E. C. (Montgomery)


Bennett, Capt. Sir E. N. (Cardiff C.)
Baxton, C. R. (Yorks, W. R. Elland)
Day, Harry


Dickson, T.
Lawrence, Susan
Ritson, J.


Dukes, C.
Lawrie, Hugh Hartley (stalybridge)
Roberts, Rt. Hon. F. O. (W. Bromwich)


Duncan, Charles
Lawther, W. (Barnard Castle)
Rosbotham, D. S. T.


Ede, James Chuter
Leach, W.
Rowson, Guy


Edge, Sir William
Lee, Frank (Derby, N. E.)
Russell, Richard John (Eddisbury)


Edmunds, J. E.
Lees, J.
Salter, Dr. Alfred


Edwards, C. (Monmouth, Bedwellty)
Lewis, T. (Southampton)
Samuel, Rt. Hon. Sir H. (Darwen)


Edwards, E. (Morpeth)
Lloyd, C. Ellis
Sanders, W. S.


Egan, W. H.
Logan, David Gilbert
Sandham, E.


Elmley, Viscount
Longbottom, A. W.
Sawyer, G. F.


England, Colonel A.
Longden, F.
Scrymgeour, E.


Evans, Capt. Ernest (Walsh Univer.)
Lowth, Thomas
Scurr, John


Foot, Isaac
Lunn, William
Sexton, James


Gardner, B. W. (West Ham, Upton)
Macdonald, Gordon (Ince)
Shaw, Rt. Hon. Thomas (Preston)


Gardner, J. P. (Hammersmith, N.)
MacDonald, Rt. Hon. J. R. (Seaham)
Shepherd, Arthur Lewis


George, Megan Lloyd (Anglesea)
MacDonald, Malcolm (Bassetlaw)
Sherwood, G. H.


Gibbins, Joseph
McElwee, A.
Shield, George William


Gibson, H. M. (Lancs, Mossley)
McEntee, V. L.
Shiels, Dr. Drummond


Gill, T. H.
McGovern, J. (Glasgow, Shettleston)
Shillaker, J. F.


Glassey, A. E.
McKinlay, A.
Shinwell, E.


Gossling, A. G.
MacLaren, Andrew
Short, Alfred (Wednesbury)


Gould, F.
Maclean, Sir Donald (Cornwall, N.)
Simmons, C. J.


Graham, D. M. (Lanark, Hamilton)
Maclean, Neil (Glasgow, Govan)
Sinclair, Sir A. (Caithness)


Graham, Rt. Hon. Wm. (Edin., Cent.)
MacNeill-Weir, L.
Sinkinson, George


Grenfell, D. R. (Glamorgan)
McShare, John James
Sitch, Charles H.


Griffiths, T. (Monmouth, Pontypool)
Malone, C. L'Estrange (N'thampton)
Smith, Frank (Nuneaton)


Groves, Thomas E.
Mander, Geoffrey le M.
Smith, H. B. Lees- (Keighley)


Grundy, Thomas W.
Mansfield, W.
Smith, Rennie (Penistone)


Hall, F. (York, W. R., Normanton)
March, S.
Smith, Tom (Pontefract)


Hall, G. H. (Merthyr Tydvil)
Marcus, M.
Snell, Harry


Hamilton, Mary Agnes (Blackburn)
Markham, S. F.
Snowden, Rt. Hon. Philip


Hardie, George D.
Marley, J.
Snowden, Thomas (Accrington)


Harris, Percy A.
Marshall, Fred
Stamford, Thomas W.


Hartshorn, Rt. Hon. Vernon
Mathers, George
Stephen, Campbell


Hastings, Dr. Somerville
Maxton, James
Stewart, J. (St. Roilox)


Haycock, A. W.
Messer, Fred
Strachey, E. J. St. Loe


Hayes, John Henry
Millar, J. D.
Sullivan, J.


Henderson, Rt. Hon. A. (Burnley)
Milner, Major J.
Sutton, J. E.


Henderson, Arthur, Junr. (Cardiff, S.)
Montague, Frederick
Thomas, Rt. Hon. J. H. (Derby)


Henderson, Thomas (Glasgow)
Morgan, Dr. H. B.
Thurtle, Ernest


Henderson, W. W. (Middx., Enfield)
Morley, Ralph
Tinker, John Joseph


Herriotts, J.
Morris, Rhys Hopkins
Tout, W. J.


Hirst, G. H. (York W. R. Wentworth)
Morris-Jones, Dr. J. H. (Denbigh)
Townend, A. E.


Hirst, W. (Bradford, South)
Morrison, Herbert (Hackney, South)
Trevelyan, Rt. Hon. Sir Charles


Hoffman, P. C.
Morrison, Robert C. (Tottenham, N.)
Vaughan, D. J.


Hollins, A.
Mort, D. L.
Viant, S. P.


Horrabin, J. F.
Moses, J. J. H.
Walker, J.


Hudson, James H. (Huddersfield)
Mosley, Sir Oswald (Smethwick)
Wallace, H. W.


Hunter, Dr. Joseph
Muff, G.
Wallhead, Richard C.


Hutchison, Maj.-Gen. Sir R.
Muggeridge, H. T.
Watkins, F. C.


Isaacs, George
Murnin, Hugh
Watson, W. M. (Dunfermline)


Jenkins, W. (Glamorgan, Neath)
Nathan, Major H. L.
Watts-Morgan, Lt.-Col. D. (Rhondda)


John, William (Rhondda, West)
Naylor, T. E.
Wedgwood, Rt. Hon. Josiah


Johnston, Thomas
Owen, Major G. (Carnarvon)
Wellock, Wilfred


Jones, F. Llewellyn- (Flint)
Owen, H. F. (Hereford)
Welsh, James (Paisley)


Jones, Henry Haydn (Merioneth)
Palin, John Henry
Welsh, James C. (Coatbridge)


Jones, J. J. (West Ham, Silvertown)
Palmer, E. T.
West, F. R.


Jones, Rt. Hon. Leif (Camborne)
Parkinson, John Allen (Wigan)
Westwood, Joseph


Jones, Morgan (Caerphilly)
Perry, S. F.
White, H. G.


Jones, T. I. Mardy (Pontypridd)
Pethick-Lawrence, F. W.
Whiteley, Wilfrid (Birm,, Ladywood)


Jowett, Rt. Hon. F. W.
Phillips, Dr. Marion
Whiteley, William (Blaydon)


Jowitt, Rt. Hon. Sir W. A.
Pole, Major D. G.
Williams, David (Swansea, East)


Kelly, W. T.
Potts, John S.
Williams, Dr. J. H. (Llanelly)


Kennedy, Thomas
Price, M. P.
Wilson, C. H. (Sheffield, Attercliffe)


Kinley, J.
Pybus, Percy John
Wilson, J. (Oldham)


Kirkwood, D.
Quibell, D. F. K.
Wilson, R. J. (Jarrow)


Lambert, Rt. Hon. George (S. Molton)
Ramsay, T. B. Wilson
Winterton, G. E. (Leicester, Loughb'gh)


Lang, Gordon
Raynes, W. R.
Wood, Major McKenzie (Banff)


Lansbury, Rt. Hon. George
Richards, R.
Wright, W. (Rutherglen)


Lathan, G.
Richardson, R. (Houghton-le-Spring)



Law, A. (Rosendale)
Riley, Ben (Dewsbury)
TELLERS FOR THE NOES.—




Mr. B. Smith and Mr. Paling.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

Sir L. WORTHINGTON-EVANS: We have now come to the end of a long and complicated Clause, the objects of which have the support of the Opposition as well as of the Government. It was to
prevent evasion of Death Duties by illusory transfers of property, and at the same time to avoid any interference with legitimate business. As the original Clause was presented, we found that there were many dangerous features in it and many that were entirely objectionable. The result was that my right hon.
Friends put down a number of Amendments, 30 or 40 perhaps, a great many of them important Amendments, and we have had an exhibition of restlessness on the part of the Chancellor of the Exchequer and an inclination to flout our Amendments and to suggest that we were wasting time in pointing out what we believed to be the weaknesses of the Clause. As we went on, the Chancellor found it necessary to accept a very large number of the Amendments and to recast the Clause altogether. We asked him to reprint it so that the Committee might make better progress in discussing it with the Clause as reprinted before them. We were thanked by the Chancellor for doing that in a manner peculiar to him. He complained that any such request was tomfoolery and, if more time were taken on the Amendments, he would bring in a guillotine Resolution. He did reprint the Clause and we had a most amicable day and real progress was made both yesterday and to-day, and real improvements have been made in the Clause. Talking of reprints, I now ask the Government, as there have been a great many Amendments since the Clause was reprinted, that they shall again reprint it, well ahead of Report, so that we may consider what further Amendments, if any, are necessary for Report. That is the more reasonable because on at least two, and I think three, important questions the Government were unable to deal with the matter in Committee but promised to consider them before Report.
What have we done in Committee? The Amendments that have been made are really of the greatest importance. The first to which I will refer is that getting rid of the phrase "private company" and so preventing confusion between the definition of a private company in this Bill and in the Companies Act. That is certainly a great improvement. We have removed from the Bill double taxation, for in the Clause as originally introduced not only was a company to be taxed for Death Duties on the death, in certain circumstances, of the transferor, but also the previous owner of the property was to have his taxation increased. We have deprived the Revenue of a most extraordinary Clause that the Chancellor put into the Bill giving them the option of taking either of two values
of the subject to be taxed, either the value at the date of the transfer or at the date of the death of the transferor. As proposed originally, the taxation was to be levied on whichever was the higher value—an option in favour of the revenue only and not in favour of the taxpayer. The Chancellor could not defend that and so he has very naturally withdrawn it, and now the value at death only is to be taken. Similarly with regard to benefits. The Clause as originally proposed, again, gave an option to the Revenue to pick out of the three years the year that suited them best. Now, much more fairly, an average of the three years is to be taken. Another Amendment has increased from 30 to 50 per cent. the amount that is necessary before the company is charged with the Death Duties. "Bona fide" is out in most cases, but, curiously, it is retained with regard to sales, although a bona fide sale stands on practically the same footing, I think, as a bona fide interest. If you can get rid of the phrase "bona fide" in the one case, it seems to me you could well get rid of it in the other. At any rate, I am told it will lead to legal trouble because of the various definitions of the phrase, and it would be wise for the Chancellor to consider that again before Report.
There are other matters that he has promised to consider. He has promised to consider whether the date of transfer should be in some way related to the date of fixing the benefits—the prescribed period. I moved an Amendment suggesting 12 years. He could not accept that but I understand that, before Report, some reconsideration will be given to it. Reconsideration is also to be given to a point I have been discussing with the Attorney-General to-day. It seems to me, although the avowed intention of the Government is not to interfere with gifts inter vivos and to leave the present law alone, they have by some Clauses in this, especially by fixing the prescribed period relating to the accounting year, extended it for three and three quarter years in certain circumstances. The Attorney-General does not think that is the case, but he has promised to consider whether anything is necessary in that respect. No one can say, therefore, that there has not been great improvements made at the instance of the Opposition, for
almost every single one of what the Chancellor has from time to time called concessions to the taxpayer has resulted from Amendments put down by the Opposition but not moved, because the Chancellor has either put his name on the Amendments or put down Amendments in slightly differing words to cover the same points. Nevertheless, though much better than when it was brought in—which entirely justifies the line the Opposition have taken in proposing Amendments and discussing them—there are still parts of the Clause which are going to deal great hardship to quite innocent people and are, I think, going to prevent land development in the future.
The Clauses to which the Attorney-General objects being called retrospective, whether retrospective or not, will affect people who have formed companies and transferred property to them for perfectly legitimate purposes and not for the purpose of evading Death Duties at all. If it does not affect them retrospectively, at any rate, the Clause is retroactive, because it affects them notwithstanding that they have hitherto been acting within the law, and it will handicap land development. We know what the effect of the Budget of 1909–10 was on building. The shortage of houses before the War was largely due to the fear caused by that Budget, and confidence was destroyed to such an extent that builders could not get the finance that was necessary in order to enable them to carry on the building of small houses. So also in this Clause you have a distinct handicap to land development. You are going to destroy confidence and, to some extent, render more difficult the financing of building estates.

Mr. MacLAREN: There is no parallel there at all, and you know it.

Sir L. WORTHINGTON-EVANS: That is an extraordinarily offensive remark. There is a parallel. You only have to destroy confidence and you will find that it is infinitely more difficult to get the finance necessary for the purpose of enabling people without much capital to develop their estates, and it is because this Clause will affect estate development in that way that I think the Chancellor would do well to consider further mitigation that he can make in that
sense. While grateful to him for having accepted so many of our Amendments, I still find that the Clause contains matters to which further consideration should be given by the Government.

Sir WALTER GREAVES-LORD: I should like to join in the appeal to the Chancellor to have the Clause reprinted before Report. We want not merely that, but a print of the Clause with the undertakings that have been given carried out, so far as they are going to be carried, so that one may see the effect of them. There is no sympathy in any part of the Committee for the tax evader, who is robbing every other member of the community, because by his evasion he compels everyone else to pay more than his fair share of taxation. On the other hand, if your legislation is so drawn that you give the impression that one section of the community or one particular type of property is being asked to pay more than its fair share of taxation, you are apt to breed sympathy with the man who, under those circumstances, tries to take care that he pays no more than his fair share. That is one of the dangers that are inherent in the Clause as it stands at present. I, for one, do not pretend to understand it. After all, revenue law and company law are two highly technical divisions of the law, and certainly one who does not pretend to be an authority on either would be guilty of very serious pretence if he said he could understand the Clause either as originally drawn or in its amended form.
The difficulty in which we find ourselves is that even those who are experts on these two branches of the law are in very grave doubt as to the effect of the Clause, even though it has been so plentifully amended. The result is that grave doubt and uncertainty are created by the method that is adopted of dealing with tax evasion. Instead of dealing with it on the broad principle of prohibiting tax evasion, the Legislature is attempting to define the cases which are and which are not evasion, and once you start that, you will always find that a very large number of cases that were thought to be evasion, when the real facts of the case are inquired into, are not. You will also find what is equally important from the point of view of the State and of the Revenue, that a great many of the cases which you have left
untouched, and to which you have given a certain amount of sanctity as cases where there is no evasion, are, in fact, evasions which are more guilty than a great many of the transactions which you are trying to put down. Once you get into the realm of narrow definition of an Act of Parliament transactions of that description, you are getting into a land which is bristling with danger.
I should like to make, at this late time, an appeal to the Chancellor of the Exchequer and to the Attorney-General to try to get away from this miasma of definition. Let the Chancellor of the Exchequer take his courage in both bands and scrap the Clause as it stands, and start anew with a new idea and an idea to deal with the matter on broad lines. Why should it be difficult to deal with it on broad lines? If you take the history of our criminal law, in regard to which to-day there is probably a greater amount of certainty than in any other system of criminal law in the whole world, it has not grown up by any attempt to define by Statute that which is and that which is not crime. Nobody has thought of putting into a Statute a certain set of circumstances, and saying that in those circumstances a man must be presumed to have obtained money by false pretences, and that in another set of circumstances he must be presumed not to have obtained money by false pretences. No one has pretended to put that into a Statute. If you had done so, the criminal law, instead of being an absolute certainty, would be in absolute chaos. Our criminal law has grown up by the application of general principles to the facts of cases as the cases have arisen. The result is, that you have to-day the degree of certainty which I have mentioned.
Why cannot we try something of that kind in connection with Revenue legislation? Why should it not be possible to enact broadly, that transfers and transactions which are devised or designed to evade the taxation which Parliament has decreed should be void? Why should we not make it an offence on the part of anybody to take part in carrying out a transaction, or in attempting to carry out a transaction, which is devised or designed to evade the taxation which Parliament has laid down? You
may say, "Oh, that is difficult." Well, the Courts have shown in the case of the criminal law that they are capable of making a distinction in such matters. After all, you are applying the law. You are applying principles to particular facts as they arise. When you do that you have all the circumstances before you. You are not dealing, as you are dealing in this Clause, with wholly artificial standards. If you are applying principles to ascertain facts, you are dealing not with artificial standards but with real circumstances, and with deeds which have actually transpired. Why should it not be possible in those circumstances to build up a prevention of tax evasion which would be certain? I think that you would do something very much more than that. You would stop those people whose sole design is to evade the Revenue laws—to evade their own share of taxation, and to put upon others more than their share. You would go a great deal to prevent those people from going to their solicitors to try to get them to think out for them schemes of tax evasion. I am certain that some of the worst of the tax-evaders in this country—and there are some extremely bad cases of tax evasion—are people who have the most terrible fear even of the shadow of the criminal law. If you once got a prohibition of that kind on to the Statute Book and if you once made it clear that the Courts would have the right to revise transactions which were of the nature of tax evasion, you would do far more to prevent it, and, at the same time, you would avoid the great difficulty which you are in to-day by reason of this method of definition.
If this Clause passes in its present amended form, the business man, and even the most expert lawyer, will be in a position of great difficulty to know whether a transaction is or is not within the law. The effect of that will be to stifle legitimate business, while, at the same time, it will also have the effect of putting those who are ingenious at once into the position of trying to be even more ingenious in order to evade the law even as we have enacted it. In those circumstances you will do no good. You will not prevent evasion by this type of Statute, but you will do a great deal to stifle legitimate business.

Major NATHAN: I intend to bear in mind the arrangement which has been made that this debate shall be brought to an end at half-past Seven o'Clock. Therefore, I do not propose to traverse the ground that has been covered so often in the course of these debates, except to express to the Chancellor of the Exchequer and to those sitting by him my appreciation of the way in which they have accepted certain of the Amendments which my hon. Friends and I put upon the Paper with a view to dealing with some of the flaws of this Bill. There has been a good deal of reference in the course of this debate to those whom it is hoped to get within the net of the Inland Revenue by means of this Clause. In the course of these discussions and by reason of the fact that this Clause is based upon a Financial Resolution, it is important that the Committee should bear in mind that the Clause is a charging Clause and is imposing a tax where hitherto no tax has existed. It behoves the Committee to scrutinise with the utmost vigilance every attempt, except in the plainest and most explicit terms, to impose fresh taxation upon the already overburdened taxpayer.
A good many references have been made to evasion. It is important tat this Committee should bear in mind what is the converse of evasion. It is invasion, the invasion of the rights and legitimate interests of the ordinary taxpayer and the man-in-the-street by the executive and the authorities of the Inland Revenue. It is the function of this Committee to stand between the Government executive and the Revenue on the one hand and the taxpaying public on the other in this as in all other tax matters. Complaint is made, no doubt legitimately, that taxpayers have taken advantage of the rights which the law permits and have so arranged their affairs in certain instances—just this is the complaint of the Chancellor of the Exchequer—as to minimise liability. In other words, they have taken advantage of the letter of the law. Has the Chancellor of the Exchequer considered the cases where, against the justice and equity of the case, the Inland Revenue have taken advantage of the strict letter of the law? There is growing up in this country—and let there be no doubt or dispute about it—a feeling of profound antagonism to the
Inland Revenue. It is not a feeling against any officials, because they discharge their duties with diligence and courtesy, but against the spirit by which they are animated at the instance of this Government or the Government of whatever party they have to serve. It is important that that feeling in the community should be completely recognised. There is a most striking instance, which is to be the subject of debate in this House in the course of the next few days, where the Inland Revenue, contrary, as I believe, to the intentions of Parliament and to the understanding of those members of the Government responsible for the Treasury, contrary to the understanding of what should have taken place and contrary to the understanding by the Courts of what was intended to be the result of legislation, where, as my hon. Friend the Member for Leith (Mr. E. Brown) pointed out, grants made to local authorities for purposes of unemployment were held to hear Income Tax by a strict interpretation——

The CHAIRMAN (Mr. Robert Young): This matter does not refer to the Bill which is now before the Committee.

Major NATHAN: I am sorry, Mr. Young, that you should feel that I have been Jed to transgress. I will not pursue the matter any further. The drafting of the Clause is such that, in my judgment, the 2,000 cases or thereabouts which are already referred to in the textbooks on Death Duties will lagely be increased. There has seldom, in my experience, been a Bill more likely to give rise to difficulties and to a greater number of cases being brought before the courts. I suspect that the Government have not really faced up to the problems which confront them under the provisions of this Clause. I should like to put a few questions to the Government. I ask whether these questions have been considered? I will not ask for an answer to them to-night. Is it English property always which is deemed to pass on the death or only if the company is resident in England? What is the position if the deceased dies domiciled abroad and the company is resident abroad? Is the sum exempt from duty or not? If a company is resident in England and the deceased has been domiciled abroad, what is to happen? Does the sum pass in England? A private company incor-
porated in England, trading in India, buys property in India from a native by means of an offending transaction. The native dies within three years. Does the company pay Estate Duty on the death of the Indian native in India or not?
7.0 p.m.
These are some of the questions. They are not theoretical questions. They are practical questions. They are questions with which many lawyers and business men have to deal every day of the week, and with which the able civil servants and commissioners will have to deal every day in the week. They are cases with which the courts of justice of the country will have to deal, far more than they should be called upon to do and far more than they would have been called upon to do had this Clause been considered and drafted more carefully. I also wish to ask the Chancellor of the Exchequer whether he has visualised what the practical effect of this Clause in ordinary every day commercial life is going to be? I will put only three short points, all arising in the same way. I take the balance sheet of a company. No man knows whether it is or is not an offending company, because it may depend upon circumstances entirely outside the control of that company. How is the auditor to comply with his mandatory obligations under the Companies Acts? How is he to comply with his duty set forth in precise and definite terms in the Companies Acts, of stating in the company's balance sheet what are the liabilities of the company? He does not know. He cannot know. Even if it is an offending transaction, he cannot tell the value of the property which is going to pass, because the value is not going to be ascertained until some future date on the death of the transferor. No one knows what the liability will be, and the result is that one of the great rights of the public of being able to pay a shilling at Somerset House, and inspect the balance sheet of the company, a great safeguard contained in the Companies Act, will very largely disappear.

Mr. MUGGERIDGE: Public companies.

Major NATHAN: I mean public. You have a large number of public companies concerned under this Clause. I was saying that those facts cannot be known at the
time. It is not known when the man is alive, but is known only after he is dead. Take next the case of a company which wants credit, and takes a balance sheet to the bank certified by its auditors. The auditors may make a proviso saying "There is or may be a liability resting on the company under Section 29 of the Finance Act of 1930. We do not know what it may be or when it will arise. The bank will at once say that they cannot advance money or give credit because they cannot rely on this balance sheet as, although the balance sheet shows the ordinary trading position, there may be this debt, due to the Crown, which ranks in front of other debts. That will be a grave interference with the ordinary conduct and commerce of every-day life, and the facilities of credit will, in my deliberate judgment, be dangerously impaired by the provisions contained in this Clause. I take my third and last case, which is that of a company going to be wound up. The liquidator is under an obligation, before making any distribution of assets of a company which is in course of being wound up, to discharge its liabilities. I assume, as happens to most companies which are wound up, that the company makes a loss, so that every payment made by the company may give rise to a claim under Section 29. The liquidator will have to wait for three years before he can distribute any of the assets of that company, because not for three years will he know whether or not there is a debt due to the Crown under this Clause, or know what are the assets he has available to distribute. It is for these practical business reasons, which are familiar to every man engaged in business in the City of London, that I am forced to go into the Lobby against the Government on this Clause.

Mr. CROOM-JOHNSON: I desire, in the first place, to express my own feeling that the task which the draftsman of this Section undertook was almost an impossible task. We have been engaged for many weary hours in endeavouring to stop up a gap in the existing law, which all three parties in the House desire to see stopped up, but the material with which we are endeavouring to stop up the gap is a material which lacks logic in its whole composition. We have adopted and are adopting under this Clause a method of rule and thumb which is likely, in my judgment, to cause con-
siderable difficulties, and is at the same time undoubtedly liable to point out to those people, who really do desire to avoid proper payment of Estate Duties, methods by which this further piece of legislation may itself be evaded. There are not wanting a number of us in this House who have watched the formation of this piece of legislation, who already see methods by which, if we chose to make use of that knowledge and give that advice to other people, we could give them hints as to the way in which this legislation can be evaded.
This Clause is fundamentally unsound from its root upwards. It is based entirely on the theory that, first of all, with regard to land and land alone, every company which is brought into existence for the purpose of taking over landed estates, in country districts particularly, is brought into existence for the purpose of evading taxation in one form or another, whereas in my little experience of these matters, so far as I have been able to test them, those companies are very largely brought into existence in order to grapple with the kind of attack so often made on those who have to do with agriculture that they are not putting their house in order, and bringing their methods and systems up to date. The root of this matter is something which is not touched at all by this Clause. What has happened has been this: In times past this House and Parliament generally has thought it wise to promote the principle of limited liability companies. We have promoted that system and that notion, which is after all an invention of the English people, and have allowed it to go to such a point that now you have companies which are companies in form and nothing else but form, and we are finding that this principle, which we introduced for the purpose of helping the trade and industry of the country by encouraging people under the shelter of limited liability, is now being turned against the State with regard to Income Tax.
In the Finance Act of 1922, and again in the Finance Act of 1927, this House attempted to grapple with evasions of Income Tax which had been carried through by reason of the extravagant way in which we had permitted these limited liability companies in name only to operate. Now we are beginning another
exception upon limited liability law. That is what this Clause is. I agree most wholeheartedly with the observations made by the hon. and gallant Member for North-East Bethnal Green (Major Nathan), who pointed out the difficulties to which this Clause may give rise in the case of those who have to deal with limited liability companies. That is the real problem which wants to be dealt with. We have permitted limited liability companies of a kind which, although they have the word "limited" after their name, are weapons very often for tax evasion of one sort or another, and very often cloaks or screens of which the less said the better.
The real issue, which I invite the Government to consider in another Finance Bill, is whether the right method of dealing with the question of tax evasion is not to see whether we cannot attack them in some plain and simple form, as suggested by my hon. and learned Friend below the Gangway, rather than by building up exception after exception with all sorts of technical difficulties, trying to express that which we all want to do but which is so difficult to express when you try to put it on paper, and so difficult to make watertight when you try to stop the gap. If this discussion has done nothing more than indicate the possibilities of looking to see whether our limited liability laws have not now got to such a point that they need some more effective control and restriction in the formation of companies, then the considerable time this Committee has spent on this Clause will not have been spent in vain.
I will give one illustration on this matter, which came to my notice within the last few weeks, to indicate the sort of thing that is a possibility and how easily people can form companies and arrange finance that has a bad effect upon Income Tax and other Revenue returns and a bad effect upon the ordinary citizen who desires to pay his fair share of tax. It is the case of a company registered with a share capital of £100, total number of shares issued five, of £1 each, total capital called up on this company, which has been in existence for seven years, 1s. for each share, actually paid on each share nil. The whole of that, too, is under the control of a gentleman who does not even figure as one of the directors or managers of the company.
That is a problem which really wants to be attacked. While those of us possessing some acquaintance with the subject have been pleased to give such assistance as we could in attempting to carry out what the Government have been seeking to carry out by this Measure, speaking for myself, I cannot help feeling that the time given to this subject might perfectly well have been given to dealing with one of the many others of our national problems and would have achieved much better results. This Clause is not likely to produce much in revenue, and I cannot help feeling that it is not going to achieve the object for which it is designed, and that the whole method here is not one which is likely to prove useful in future.

Mr. ATKINSON: We ought not to be asked to accept this Clause in its present form. I will briefly give the reasons why I say that. First of all it is built on artificialities. Artificiality always lends itself to evasion. Anybody giving his mind to it can drive a carriage-and-pair through any part of this Clause. The next reason why we ought not to be asked to accept it is this: I do not want to be offensive, but everybody will agree that, in its original form, it was very ill thought out. If the Government had offered a prize of £50 for the best-drawn Clause to achieve the object expressed in the marginal note, they would have been supplied with a great many better Clauses. That would not matter if even its present form had shown any evidence of considered judgment, and if even now we could say that it was well thought out. The Clause in truth is in a state of fluidity now. We do not know what form it will take when it comes to the Report stage.
I only want to indicate two or three matters which, I think everybody will agree, are of great importance, and upon which the final view of the Government has not yet been expressed. Let us take this proviso introduced by the Government about the method of assessing the value of the property, whether the date of transfer or the date of death. At any rate they have promised to remove that, but the real trouble about that is, as I have already pointed out, that at present, drawn in the form in which we are asked to pass it, it covers the case of a land company—and most of the companies
dealing with land are those which many years ago received, in an objectionable transaction, land of some trifling value and sold it many years ago for a small sum, and now in the hands of the purchasers that land has become something of great value. As I was saying, there must be a tax on the present value of the subject matter of the transfer. When I pointed that out to the Parliamentary Secretary he at once said, "We do not intend any such thing." If that is the fact I hope we are going to change it.
In the following Clause the right hon. Gentleman will see a very good model of what is wanted, the proviso on page 28, which deals with life assets. There you have the way it should be done. You thought of it in connection with Clause 30; why did nobody think of it in connection with Clause 29? Land sold 20 years ago for £100, and coal has been found in it; it is worth many thousands to-day. The Clause that we are being asked to add to the Bill would perpetrate this immense injustice of making the private company liable to pay duty on that greatly increased value of land that they have not heard of or seen for years and years. We ought not to be asked to add to the Bill a Clause which contains injustices of this sort. Then you come to another of the considered Amendments, and that is the addition to the list of excepted transactions:
Transfer of personal chattels not yielding income.
and
Transfers of property made to a company to which this Part of this Act applies in the capacity of trustee, factor, agent, receiver of manager.
The Attorney-General and the Chancellor of the Exchequer were both asked, "What do you mean by it? What transactions are they designed to cover? "Nobody knows. Nobody can give a meaning to them because they have not got a meaning. Do not think that I am making any complaint at all with regard to the very courteous way in which our criticisms have been met. Though I am finding fault, I am not finding fault with the way in which we have been met about these things, but about our being asked to add a Clause to the Bill which is admittedly in such a incomplete and unsatisfactory state. What is to be the final form of the excepted transactions in the Clause? We do not know. It is
all a matter of uncertainty. Then you come to this method of calculating the income of a company. I cannot help feeling that the method adopted is one which perpetrates a real injustice. I do not think it is sound; the Attorney-General admitted that it was artificial. There is no need for artificiality, if the Government had accepted the suggestions of my right hon. Friend to substitute earnings and, if you like, a lower percentage. You could have got something which would not be artificial. Unnecessarily you are adding to the artificiality, and opening all sorts of doors to those who seek to evade the law.
Why should you have such unnecessary artificiality of that kind in a Clause which is necessarily complicated, however simple you try to make it? The position is that we really do not know what the Clause means. We do not know what form it will take, or what effect it will have in its final form. It would be so much better to let this stand over until we could get it in its final form. We are all in sympathy with its object, although we do not think it will achieve that object. We have not the least idea to which companies it is going to apply, and we ought not to pass the Clause in this hybrid state. I shall vote against it, not because I am not in sympathy with the object, but because of its undigested condition.

Mr. O'CONNOR: I feel that in spite of the fact that an agreement has been made, the fact that the general principle of this Clause has not been fully discussed really throws an obligation on this side of the Committee to register its protest against a piece of legislation which is badly designed and ill-fitted to carry out the purpose for which it is intended. It begins by being entirely wrong in principle. If you find that a gentleman has transferred property to a company and that the company pays annual benefits to him, then you attempt to find the value of his capital at death by a multiplication sum in which you multiply his income by a certain figure in order to arrive at what you say is his asset, that asset being in the possession of a company at his death. It is a wholly artificial and fictitious method of arriving at a man's asset. His income does not matter at all. You want to find the value of the asset which passes
at death. This Clause provides a means for finding it which is wholly artificial and wholly unrelated to any experience whatsoever. The Clause is based on a fallacy, that if you transfer capital to a company you transfer X pounds, and if you are receiving Y pounds benefit from the company then the Y pounds benefit that you are receiving is a product of the X pounds that you transfer, and that is not true. It is not true in the case of wasting assets, where the assets may be entirely expired at the time that you are receiving an income from the company, and it is not true in the case of increasing assets which may have been increased to an enormous amount more than would repay the capital value of the income that you are receiving.
Fundamentally the Clause fails because of its principles, which are absolutely unsound. It can operate with any fairness at all only by assuming the widest possible discretion to the Treasury to pick out those cases which are tax-evading cases and those which are genuine cases. I object to increasing to such an alarming extent the discretionary powers of the Treasury, because it can do such enormous damage to private companies which are carrying on their business and operating with impartiality. I cannot do more than give the merest outline of my case, in the hope that some consideration may be given before the Report stage to some of the phantasies that we have not had explained to us in the course of this Bill. Somebody ought to explain on Report stage where patents stand. I gave a case yesterday. Where do repairing leases stand? Where does livestock stand? These are all cases of wasting assets. Then, on the other hand, take the case of mineral rights, which are discovered after transfer, and where correspondingly the value of the assets has enormously increased. The unfairness of the exclusion of royalties in computing a fixed income has not been stressed at all sufficiently. This Clause presents alarming possibilities to publishing companies, because in computing what is the income of a private publishing company, under the perfectly fantastc income computation Clause, you are to deduct the income from royalties, which may very well be, in the case of a publishing company, practically the main income that the company is going to receive.
It would be impossible to go through in detail the number of cases that I know, all perfectly bona fide and genuine cases, that will be caught by a Clause of this sort if it stands in anything like its present form. We have had no definition of what is a "personal chattel, not yielding income." I can think of some: a penny-in-the-slot machine; a fleet of omnibuses; a Linotype machine; an office safe. Those are some of the simplest that occurred to me this afternoon. Are these "income-yielding, personal fixed assets"? I ought to be blessing the Chancellor of the Exchequer for this Bill. It it going to produce endless work for the Bar in litigation to decide what cases are and what are not within the ambit of the Clause. We know that certain kinds of transfers of property are exempted from the operation of the Clause. The simplest forms are bona fide sales—and when a sale is bona fide and when it is not, passes the wit of man to know. Exchanges find no place in the Bill. What becomes of hire purchase agreements? What becomes of a private company which has a hire purchase agreement with a man and the man dies just after he has made the last payment of hire-purchase rent? What is going to happen to

the asset in that case? That is not a purchase. That is also the case with some other transactions not covered by the Bill.

See how it affects people in the humblest walks of life. A greengrocer owns a farm, and he has been accustomed to supply his greengrocer's shop from his farm. He wants to set his son up in business and so he makes him a present of the shop and then the son goes on dealing with the man. If the amount that the son pays to his father for the produce exceeds 33 per cent. and the father dies, the unfortunate son, instead of finding that he had a wedding present, will find that he has got to pay Death Duties on the death of his father. That is the kind of anomaly. I have had to leave out the details owing to the hasty way in which I am speaking. That case is absolutely watertight and so are many similar cases that I could instance. The whole Clause bristles with absurdities. It is conceived in ineptitude and brought forward in malice, and I hope that the Committee will reject it.

Question put, "That the Clause, as amended, stand part of the Bill."

The Committee divided: Ayes, 272; Noes, 152.

Division No. 401.]
AYES.
[7.28 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Cameron, A. G.
Gossling, A. G.


Adamson, W. M. (Staff., Cannock)
Cape, Thomas
Gould, F.


Addison, Rt. Hon. Dr. Christopher
Charieton, H. C.
Graham, D. M. (Lanark, Hamilton)


Aitchison, Rt. Hon. Craigie M.
Chater, Daniel
Graham, Rt. Hon. Wm. (Edin., Cent.)


Alexander, Rt. Hon. A. V. (Hillsbro')
Church, Major A. G.
Gray, Milner


Alpass, J. H.
Clarke, J. S.
Grenfell, D. R. (Glamorgan)


Ammon, Charles George
Cluse, W. S.
Griffiths, T. (Monmouth, Pontypool)


Arnott, John
Clynes, Rt. Hon. John R.
Groves, Thomas E.


Aske, Sir Robert
Cocks, Frederick Seymour
Grundy, Thomas W.


Attlee, Clement Richard
Collins, Sir Godfrey (Greenock)
Hall, F. (York, W. R., Normanton)


Ayles, Walter
Compton, Joseph
Hall, G. H. (Merthyr Tydvil)


Baker, John (Wolverhampton, Bilston)
Cove, William G.
Hall, Capt. W. P. (Portsmouth, C.)


Baldwin, Oliver (Dudley)
Cowan, D. M.
Hamilton, Mary Agnes (Blackburn)


Barr, James
Daggar, George
Hardie, George D.


Beckett, John (Camberwell, Peckham)
Dallas, George
Harris, Percy A.


Bellamy, Albert
Dalton, Hugh
Hartshorn, Rt. Hon. Vernon


Benn, Rt. Hon. Wedgwood
Davies, E. C. (Montgomery)
Hastings, Dr. Somerville


Bennett, Capt. Sir E. N. (Cardiff C.)
Day, Harry
Haycock, A. W.


Bennett, William (Battersea, South)
Dickson, T.
Hayes, John Henry


Benson, G.
Dukes, C.
Henderson, Rt. Hon. A. (Burnley)


Bentham, Dr. Ethel
Duncan, Charles
Henderson, Arthur, Junr. (Cardiff, S.)


Bevan, Aneurin (Ebbw Vale)
Ede, James Chuter
Henderson, Thomas (Glasgow)


Bilndell, James
Edmunds, J. E.
Henderson, W. W. (Middx., Enfield)


Bondfield, Rt. Hon. Margaret
Edwards, C. (Monmouth, Bedweilty)
Herriotts, J.


Bowen, J. W.
Edwards, E. (Morpeth)
Hirst, G. H. (York W. R. Wentworth)


Bowerman, Rt. Hon. Charles W.
Egan, W. H.
Hirst, W. (Bradford, South)


Brockway, A. Fenner
Elmley, Viscount
Hoffman, P. C.


Brooke, W.
Evans, Capt. Ernest (Welsh Univer.)
Horrabin, J. F.


Brothers, M.
Foot, Isaac
Hudson, James H. (Huddersfield)


Brown, C. W. E. (Notts, Mansfield)
Gardner, B. W. (West Ham, Upton)
Hunter, Dr. Joseph


Brown, Ernest (Leith)
Gardner, J. P. (Hammersmith, N.)
Hutchison, Maj.-Gen. Sir R.


Brown, Rt. Hon. J. (South Ayrshire)
George, Megan Lloyd (Anglesea)
Isaacs, George


Brown, W. J. (Wolverhampton, West)
Gibbins, Joseph
Jenkins, W. (Glamorgan, Neath)


Buchanan, G.
Gibson, H. M. (Lancs, Mossley)
John, William (Rhondda, West)


Burgess, F. G.
Gill, T. H.
Johnston, Thomas


Buxton, C. R. (Yorks. W. R. Elland)
Gillett, George M.
Jones, F. Llewellyn- (Flint)


Caine, Derwent Hall-
Glassey, A. E.
Jones, Henry Haydn (Merioneth)


Jones, J. J. (West Ham, Silvertown)
Milner, Major J.
Sinkinson, George


Jones, Rt. Hon Leif (Camborne)
Montague, Frederick
Sitch, Charles H.


Jones, Morgan (Caerphilly)
Morgan, Dr. H. B.
Smith, Ben (Bermondsey, Rotherhithe)


Jones, T. I. Mardy (Pontypridd)
Morley, Ralph
Smith, Frank (Nuneaton)


Jowett, Rt. Hon. F. W.
Morris, Rhys Hopkins
Smith, H. B. Lees (Keighley)


Jowitt, Rt. Hon. Sir W. A.
Morris-Jones, Dr. J. H. (Denbigh)
Smith, Rennie (Penistone)


Kelly, W. T.
Morrison Herbert (Hackney, South)
Smith, Tom (Pontefract)


Kennedy, Thomas
Morrison, Robert C. (Tottenham, N.)
Smith, W. R. (Norwich)


Kenworthy, Lt.-Com. Hon. Joseph M.
Mort, D. L.
Snell, Harry


Kinley, J.
Moses, J. J. H.
Snowden, Rt. Hon. Philip


Kirkwood, D.
Mosley, Lady C. (Stoke-on-Trent)
Sorensen, R.


Lang, Gordon
Mosley, Sir Oswald (Smethwick)
Stamford, Thomas W.


Lansbury, Rt. Hon. George
Muff, G.
Stephen, Campbell


Lathan, G.
Muggeridge, H. T.
Stewart, J. (St. Rollox)


Law, Albert (Bolton)
Murnin, Hugh
Strachey, E. J. St. Loe


Law, A. (Rosendale)
Naylor, T. E.
Sullivan, J.


Lawrence, Susan
Newman, Sir R. H. S. D. L. (Exeter)
Sutton, J. E.


Lawrie, Hugh Hartley (Stalybridge)
Owen, Major G. (Carnarvon)
Thomas, Rt. Hon. J. H. (Derby)


Lawson, John James
Palin, John Henry
Thurtle, Ernest


Lawther, W. (Barnard Castle)
Palmer, E. T.
Tinker, John Joseph


Leach, W.
Perry, S. F.
Tout, W. J.


Lee, Frank (Derby, N. E.)
Pethick-Lawrence, F. W.
Townend, A. E.


Lee, Jennie (Lanark, Northern)
Phillips, Dr. Marion
Trevelyan, Rt. Hon. Sir Charles


Lees, J.
Pole, Major D. G.
Vaughan, D. J.


Lewis, T. (Southampton)
Potts, John S.
Viant, S. P.


Lloyd, C. Ellis
Price, M. P.
Walkden, A. G.


Logan, David Gilbert
Quibell, D. J. K.
Walker, J.


Longbottom, A. W.
Ramsay, T. B. Wilson
Wallace, H. W.


Longden, F.
Raynes, W. R.
Wallhead, Richard C.


Lowth, Thomas
Richards, R.
Watkins, F. C.


Lunn, William
Richardson, R. (Houghton-le-Spring)
Watson, W. M. (Dunfermline)


Macdonald, Gordon (Ince)
Riley, Ben (Dewsbury)
Watts-Morgan, Lt.-Col. D. (Rhondda)


MacDonald, Rt. Hon. J. R. (Seaham)
Ritson, J.
Wedgwood, Rt. Hon. Josiah


MacDonald, Malcolm (Bassetlaw)
Roberts, Rt. Hon. F. O. (W. Bromwich)
Wellock, Wilfred


McElwee, A.
Romeril, H. G.
Welsh, James (Paisley)


McEntee, V. L.
Rosbotham, D. S. T.
Welsh, James C. (Coatbridge)


McGovern, J. (Glasgow, Shettleston)
Rowson, Guy
West, F. R.


McKinlay, A.
Russell, Richard John (Eddisbury)
Westwood, Joseph


MacLaren, Andrew
Salter, Dr. Alfred
White, H. G.


Maclean, Sir Donald (Cornwall, N.)
Samuel Rt. Hon. Sir H. (Darwen)
Whiteley, Wilfrid (Birm., Ladywood)


Maclean, Neil (Glasgow, Govan)
Sanders, W. S.
Whiteley, William (Blaydon)


McShane, John James
Sandham, E.
Williams, David (Swansea, East)


Malone, C. L' Estrange (N'thampton)
Sawyer, G. F.
Williams, Dr. J. H. (Llanelly)


Mansfield, W.
Scrymgeour, E.
Wilson, C. H. (Sheffield, Attercliffe)


March, S.
Scurr, John
Wilson, J. (Oldham)


Marcus, M.
Sexton, James
Wilson, R. J. (Jarrow)


Markham, S. F.
Shaw, Rt. Hon. Thomas (Preston)
Winterton, G. E. (Leicester, Loughb'gh)


Marley, J.
Sherwood, G. H.
Wise, E. F.


Marshall, Fred
Shield, George William
Wood, Major McKenzie (Banff)


Mathers, George
Shiels, Dr. Drummond
Wright, W. (Rutherglen)


Matters, L. W.
Shillaker, J. F.
Young, R. S. (Islington, North)


Maxton, James
Shinwell, E.



Messer, Fred
Short, Alfred (Wednesbury)
TELLERS FOR THE AYES.—


Millar, J. D.
Simmons, C. J.
Mr. Allen Parkinson and Mr. Paling


Mills, J. E.
Sinclair, Sir A. (Caithness)



NOES.


Acland-Troyte, Lieut.-Colonel
Burgin, Dr. E. L.
Dugdale, Capt. T. L.


Albery, Irving James
Cadogan, Major Hon. Edward
Eden, Captain Anthony


Allen, Sir J. Sandeman (Liverp'l., W.)
Cayzer, Sir C. (Chester, City)
Edmondson, Major A. J.


Amery, Rt. Hon. Leopold C. M. S.
Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Elliot, Major Walter E.


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Chadwick, Capt. Sir Robert Burton
England, Colonel A.


Astor, Viscountess
Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)
Erskine, Lord (Somerset, Weston-s.-M.)


Atholl, Duchess of
Chamberlain, Rt. Hon. N. (Edgbaston)
Everard, W. Lindsay


Atkinson, C.
Christie, J. A.
Falle, Sir Bertram G.


Balfour, George (Hampstead)
Churchill, Rt. Hon. Winston Spencer
Fermoy, Lord


Balniel, Lord
Colfox, Major William Philip
Fielden, E. B.


Beaumont, M. W.
Colman, N. C. D.
Ford, Sir P. J.


Berry, Sir George
Colville, Major D. J.
Forestler-Walker, Sir L.


Betterton, Sir Henry B.
Courthope, Colonel Sir G. L.
Fremantle, Lieut.-Colonel Francis E.


Bevan, S. J. (Holborn)
Cranborne, Viscount
Galbraith, J. F. W.


Birchall, Major Sir John Dearman
Crichton-Stuart, Lord C.
Ganzoni, Sir John


Bird, Ernest Roy
Crookshank, Capt. H. C.
Glyn, Major R. G. C.


Bourne, Captain Robert Croft
Croom-Johnson, R. P.
Gower, Sir Robert


Bowater, Col. Sir T. Vansittart
Culverwell, C. T. (Bristol, West)
Graham, Fergus (Cumberland, N.)


Bowyer, Captain Sir George E. W.
Cunliffe-Lister, Rt. Hon. Sir Philip
Grattan-Doyle, Sir N.


Bracken, B.
Dalkeith, Earl of
Greaves-Lord, Sir Walter


Braithwaite, Major A. N.
Dalrymple-White, Lt.-Col. Sir Godfrey
Greene, W. P. Crawford


Brass, Captain Sir William
Davies, Dr. Vernon
Guinness, Rt. Hon. Walter E.


Briscoe, Richard George
Davies, Maj. Geo. F. (Somerset, Yeovil)
Hacking, Rt. Hon. Douglas H.


Brown, Col. D. C. (N'th'l'd., Hexham)
Davison, Sir W. H. (Kensington, S.)
Hall, Lieut.-Col. Sir F. (Dulwich)


Buchan, John
Dixon, Captain Rt. Hon. Herbert
Hanbury, C.


Bullock, Captain Malcolm
Duckworth, G. A. V.
Harvey, Major S. E. (Devon, Totnes)




Haslam, Henry C.
O'Neill, Sir H.
Steel-Maitland, Rt. Hon. Sir Arthur


Henderson, Capt. R. R. (Oxf'd, Henley)
Ormsby-Gore, Rt. Hon. William
Stuart, Hon. J. (Moray and Nairn)


Hennessy, Major Sir G. R. J.
Peake, Capt. Osbert
Sueter, Rear-Admiral M. F.


Herbert, Sir Dennis (Hertford)
Percy, Lord Eustace (Hastings)
Thomas, Major L. B. (King's Norton)


Hills, Major Rt. Hon. John Waller
Pownall, Sir Assheton
Thomson, Sir F.


Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Ramsbotham, H.
Titchfield, Major the Marquess of


Hurd, Percy A.
Rawson, Sir Cooper
Tryon, Rt. Hon. George Clement


Jones, Sir G. W. H. (Stoke New'gton)
Reid, David D. (County Down)
Vaughan-Morgan, Sir Kenyon


Kindersley, Major G. M.
Remer, John R.
Wallace, Capt. D. E. (Hornsey)


King, Commodore Rt. Hon. Henry D.
Rentoul, Sir Gervais S.
Ward, Lieut.-Col. Sir A. Lambert


Lamb, Sir J. Q.
Reynolds, Col. Sir James
Wardlaw-Milne, J. S.


Lambert, Rt. Hon. George (S. Molton)
Roberts, Sir Samuel (Ecclesall)
Warrender, Sir Victor


Lane Fox, Col. Rt. Hon. George R.
Ross, Major Ronald D.
Waterhouse, Captain Charles


Law, Sir Alfred (Derby, High Peak)
Ruggles-Brise, Lieut.-Colonel E. A.
Wayland, Sir William A.


Locker-Lampson, Rt. Hon. Godfrey
Russell, Alexander West (Tynemouth)
Wilson, G. H. A. (Cambridge U.)


Locker-Lampson, Com. O. (Handsw'th)
Salmon, Major I.
Windsor-Clive, Lieut.-Colonel George


Lymington, Viscount
Samuel, A. M. (Surrey, Farnham)
Winterton, Rt. Hon. Earl


Macdonald, Capt. P. D. (I. of W.)
Sandeman, Sir N. Stewart
Withers, Sir John James


Merriman, Sir F. Boyd
Sassoon, Rt. Hon. Sir Philip A. G. D.
Wolmer, Rt. Hon. Viscount


Monsell, Eyres, Com. Rt. Hon. Sir B.
Smith, Louis W. (Sheffield, Hallam)
Womersley, W. J.


Morrison, W. S. (Glos., Cirencester)
Smith, R. W. (Aberd'n & Kinc'dine, C.)
Worthington-Evans, Rt. Hon. Sir L.


Nathan, Major H. L.
Smith-Carington, Neville W.
Young, Rt. Hon. Sir Hilton


Nelson, Sir Frank
Smithers, Waldron



Newton, Sir D. G. C. (Cambridge)
Somerville, D. G. (Willesden, East)
TELLERS FOR THE NOES.—


Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)
Spender-Clay, Colonel H.
Captain Margesson and Sir George Penny.


O'Connor, T. J.
Stanley, Lord (Fylde)

Mr. CHURCHILL: I beg to, move, "That the Chairman do report Progress, and ask leave to sit again."
It would be convenient at this stage, when we have reached the business which we prescribed for this afternoon, that I should invite the Chancellor of the Exchequer to state on behalf of the Government what he has in mind for our labours this evening and also possibly for tomorrow. It will be for the convenience of everyone to know what the outlook of the Government is at this moment. I reserve any further remarks that I have to make, in pursuance of the Motion that I have made, until I have heard the Chancellor of the Exchequer.

Mr. P. SNOWDEN: I thank the Opposition for having so faithfully kept to the arrangement that was made with respect to our business for this afternoon. With regard to the future, I think the next three or four Clauses will not raise matters of such intensity as the Clause with which we have been dealing. The next Clause deals with Estate Duty where life interest is transferred to a private company, and Clause 31 deals with the charge of duty and powers of recovery. I do not think those Clauses are very controversial. Clause 32 raises the question of the valuation of shares in private companies, of which we have heard a good deal in the discussion of Clause 29. This is the ninth day of the Committee stage of the Bill. I should be surprised to hear that any Finance Bill for the last 20 years has taken nine days in Committee. I suggest that we should
try to get to the end of Clause 33 to-night. I have no desire to have an all-night sitting, but I am very much afraid that unless we make rapid progress—I mean reasonably rapid progress—before to-morrow evening it will be necessary, however disagreeable, to sit very late, and possibly very early.

Mr. CHURCHILL: And late again.

Mr. SNOWDEN: That is all that I can say at the moment. I hope that the Opposition will meet me and enable us to get the Clauses which I have mentioned.

Mr. CHURCHILL: The right hon. Gentleman is asking what is physically impossible when he suggests that we should dispose of Clauses down to 32 and 33 in the bare four hours that remain before the House would be sitting at a time that would cause considerable inconvenience to a number of hon. Members. Of course, more progress would be made if we sat until 2 or 3 o'clock, as has often been done in former times, but that leads to great inconvenience in regard to Members getting away from the House after the public conveyances have ceased to run or ply for hire. In consequence, it is often found that once we have passed the witching hour of 12.30, things tend to resolve themselves into trials of physical endurance. It seems to me that the right hon. Gentleman might be asking not more than can be accomplished reasonably to suggest that we should dispose of the Clauses down to Clause 33 before midnight tomorrow night. That, I think, would be
a very reasonable proposal and scheme for laying out our work. We should certainly endeavour to compress our criticism into that space of time.
That would enable us next week to address ourselves to the very important Clause 12, which has now been put down in its new form. The new form removes a good many of the objections that were entertained to that Clause, and I believe that it is now founded on a large measure of agreement with some of the great life insurance companies. That would seem to be a Clause which might well form the subject of our discussion on whatever day is chosen for the resumption of the Finance Bill discussions next week. After that, we have the whole range of the new Clauses, to which the utmost importance is attached. Some of them embody provisions on which the main shock on this Budget will be taken. I have frequently endeavoured, sometimes perhaps in a controversial style but more often in a friendly manner, to suggest to the Chancellor of the Exchequer that the time has come when he ought to address himself to this problem on wider lines than hitherto. It is not a question of proceeding night after night with amicable arrangements for the conduct of business and the acceptance of Amendments, such as have been readily accepted by the Government during the debates. That is quite all right as far as it goes, but it is not really a method which is adequate for the handling of the great problems with which the right hon. Gentleman is now confronted.
It seems to me that over the week-end some efforts should be made to see whether the differences which exist on this Budget cannot be more or less resolved without the right hon. Gentleman being deprived of the power of balancing his Budget, for which undoubtedly he is bound to fight to the last, or the proceedings of the Committee being unduly protracted. We all wish to avoid such sittings. Meanwhile, the days are slipping rapidly away, and although there remains for the Opposition an enormous amount of work, which we could if necessary discharge in the examination of these proposals and in the moving of new Clauses, as well as in the final revision of the Bill with Mr. Speaker in the Chair on the Report stage, nevertheless, the sooner we come to some general
understanding so that the Budget has upon it the imprint of the House of Commons as a whole, although it involves much with which we on this side do not agree, it should be possible to accelerate our discussions. I will not say more at this moment, because it may be irritating and perhaps an impediment to the course I am suggesting. But we can hold out no hope of finishing Clause 33 by to-night; even if we sat until 2 or 3 or 5 o'clock in the morning we should not succeed in doing that. The Chancellor of the Exchequer would be quite fortunate if he achieved that by 12 o'clock to-morrow night. He may do that, and it might be possible to break in on one or two of the earlier new Clauses, but certainly not on the new Clause 12. I am giving no undertaking at all; I am only indicating my position as to the time which is required.

Mr. P. SNOWDEN: I do not wish to be in the least unreasonable, but I really cannot agree with the suggestion of the right hon. Member for Epping (Mr. Churchill) that we should be content to get through these Clauses by 12 o'clock to-morrow night. I am not quite sure what the right hon. Gentleman meant, but my impression was that we should devote the whole of the day following to the discussion of Clause 12.

Mr. CHURCHILL: It would form the staple part of the discussion at the opening of the next day.

Mr. SNOWDEN: I do not think that Clause ought to take any time at all. It is a new Clause, and, I understand, is to be called first. It has been agreed with the life insurance societies, and ought not to take very long. If I could get that Clause and Clauses 30, 31, 32 and 33 by to-morrow night—and in making this suggestion I am conceding a great deal—I might be satisfied. Possibly the observations of the right hon. Member for Epping as to the Budget receiving the imprint of the House of Commons may be somewhat of a mystery to most hon. Members. May I interpret them by saying that what the right hon. Gentleman means by the imprint of the House of Commons is the imprint of the right hon. Gentleman himself. This Bill, as far as it has gone, has got the imprint of the House of Commons. The right hon. Gentleman has often taunted
us with being a minority Government, but we certainly have not been a minority Government on these matters, because our proposals have been carried by large majorities. If the Opposition are willing to agree to the suggestion that we should get through these Clauses and also the new Clause 12 by midnight to-morrow, I would be satisfied. If not, I shall have to ask the Committee to sit very late to-morrow night.

Mr. LEIF JONES: I think that the offer of the Chancellor of the Exchequer is a very fair one. If we make the same rate of progress as we have to-day, we should finish Clause 33 by half-past seven o'clock to-morrow evening, and the rest of the evening could be devoted to the consideration of Clause 12.

Sir L. WORTHINGTON-EVANS: The new Clause 12 was put on the Order Paper only last night, and we have never seen it until to-day. It is a long Clause. The Chancellor of the Exchequer says that it represents an agreement with the insurance companies. The right hon. Gentleman has no doubt agreed with the insurance companies, but this Committee certainly ought to be able to consider it and see how far it meets the points we raised, as well as meeting the points of insurance companies. I do not suspect that there will be many points which will take a long time to discuss; at the same time, to ask the Committee to get it through by tomorrow evening is asking too much. The right hon. Gentleman has seen the rate of progress that can be made when he and the Opposition are trying to get through a reasonable day's work in a reasonable time. We will be reasonable, but we cannot promise him that Clause to-morrow night without having read it.

Mr. ERNEST BROWN: The right hon. Member for St. George's (Sir L. Worthington-Evans) is quite right in referring to the rights of the Committee, but what the Committee is concerned with are points which are real and points which are not real. The fact that the views of those who are vitally interested in Clause 12, the insurance companies, have been met suggests that there is no reason for taking a long time in making other points, because I cannot conceive that hon. Members will be able to make
more real points than those which have been met in the discussions with the insurance companies. The offer of the Chancellor of the Exchequer is a fair one, and I do not see why we should not get through these Clauses and Clause 12 without any trouble by tomorrow night.

Sir DENNIS HERBERT: I have taken a great interest in Clause 12, but I have not had time to do more than read it. I do not for a moment say that I shall not, in the main, be satisfied with the Clause, but at the moment I am not able to say whether all the points which seem to me to require attention have been met by the new Clause. I am going to suggest a method by which we may get on quickly. If it is found, and we intimate to the right hon. Gentleman tomorrow, that we are likely to want further time to consider this new Clause, I hope that he will make some arrangement to take other new Clauses first. That would give us more time to consider Clause 12.

8.0 p.m.

Mr. CHURCHILL: I do not think we can carry the matter further than where it was left by the right hon. Member for St. George's (Sir L. Worthington-Evans) and the comment which has been made by the hon. Member for Watford (Sir D. Herbert). In principle, the desire of the Chancellor of the Exchequer to obtain Clause 12 before we separate to-morrow is not necessarily unattainable, but whether it is attainable or not depends on a study of the Clause in the brief time which remains before it is debated. If it should be found that, contrary to our belief, it still contains many controversial points and that the difficulties have not been met by the discussions between the Government and the life assurance societies, it will be necessary for us to suggest to the right hon. Gentleman that one or two of the other new Clauses should be given precedence. I am not giving any pledge, but it would be premature to assume at this stage that the Clause is not in a form which would enable us to dispose of it to-morrow night.

Mr. P. SNOWDEN: I think the statement has been made that it is desirable that the Opposition should have a little more time in which to consider Clause
12, and it is quite true that the Clause, in its altered form, was placed on the Paper only to-day. If the Opposition find, on an examination of Clause 12 as it has been altered, that they can accept it, practically in the form in which it appears on the Paper, we might take it to-morrow, but if they find that they require a longer time in which to consider it, I am willing that we should take some of the new Clauses instead. Of course that arrangement assumes that we should get to the end of Clause 33 in a reasonable time, but in those circumstances I should be willing to fall in with that course.

Mr. CHURCHILL: In order to save any trouble, may I suggest that a "reasonable time" would be between six o'clock and seven o'clock?

Mr. SMITHERS: There is one thing which I think the Leaders of both the Opposition and the Government ought to know in reference to this Clause. Reference has been made to this Clause as an agreed Clause, but I happen to know that already two Amendments of substance, in opposition to the views of the insurance companies, have been handed in, and those Amendments are being submitted without any desire at all to delay the proceedings.

Mr. CHURCHILL: May I ask leave to withdraw the Motion to report Progress?

The CHAIRMAN: The Chancellor of the Exchequer will forgive me if I remark at this stage that I and those at the Table were not informed that the new Clause put down by the Chancellor will take the place of the postponed Clause 12.

Motion, by leave, withdrawn.

POSTPONED CLAUSE 30.—(Estate duty where life-interest is transferred to private company.)

Sir A. POWNALL: I beg to move, in page 27, line 20, after the word "time" to insert the words "after the commencement of this Act and."
The reason for the Amendment is that without these words there is a danger of retrospective legislation in this respect. Feeling has already been expressed about the introduction of retrospective
legislation in the Finance Bill and the Amendment seeks to make sure that this Clause, at any rate, shall not apply until after the commencement of the Act.

Mr. P. SNOWDEN: The effect of the Amendment would be that all companies already in existence would get the advantage of the legal opportunities which they have had in the past of evading duties whereas others would not be in that position. That would be unjust and I regret that I cannot accept the Amendment.

Viscount WOLMER: I submit that what is unjust in this matter is retrospective legislation and that this legislation is retrospective. Parties who have been acting within their rights according to the law are now to be told that they have been tax dodgers, that they have been doing something disgraceful and that they are to be subjected to special legislation. The Amendment raises the whole question of how far the proposals of the right hon. Gentleman in this matter are legitimate. He is trying to wipe out arrangements which have been made in the past perfectly openly and under the law as it existed at the time. I suggest that the right hon. Gentleman is not going to achieve the purpose which he has in view either by Clause 29 or by this Clause for a very fundamental reason. All Chancellors of the Exchequer have found that when a tax strikes the ordinary average man as fundamentally unjust and unfair, that tax at once becomes immensely difficult to collect. On the Second Reading of this Bill we had a very interesting speech from the right hon. Gentleman the Member for Seven-oaks (Sir H. Young) on that point. What the Chancellor of the Exchequer is trying to do here is to ignore that principle. He says that the arrangements by which the holders of the life interest and the remainderman in an estate pooled their interests under an estate company are altogether unfair to the State. I cannot admit that proposition. As long as both parties take their interests in shares, they are only pooling their interests in the property. They are putting the management of the property on a business footing and they are turning their interests into shares.
The unfairness of the Government proposal is that, on the death of the holder of the life interest, the estate will be taxed not on what it is bringing in, but on the hypothetical value of the land. This is a point which I tried to put to the Attorney-General—I fear with little success—last night. It applied to Clause 29 and it applies particularly to this Clause which is devoted entirely to these settled agricultural estates. The Attorney-General accused me of defending people who were trying to evade their fair share of taxation. At the right hon. and learned Gentleman's invitation I have read my remarks, and I find that I did nothing of the sort. Our objections to this proposal are not based on any desire to protect people who are trying to avoid the payment of taxation on wealth which comes to them. I know that there are such cases, and we all admit the necessity of tightening up the law in that respect, but I submit that the ordinary case dealt with by this Clause is not such a case. The Chancellor of the Exchequer is only entitled to say that there is tax evasion on the assumption that these people are going to be taxed fairly on wealth that will come to them. Neither the Attorney-General nor the Chancellor of the Exchequer has attempted to deny that the opposite is the case in this instance.
The whole reason for the existence of this type of estate company has been to avoid these crushing Death Duties, which bear no relation at all to the income which the estate produces, or which it can legitimately produce as long as it is adequately maintained, as long as the rents are not unduly high and as long as the landlord carries out his duties. It is just because this class of property owner has taken a low rate of interest on his property, it is just because he has not accumulated great wealth, that this taxation upon the theoretical value of his property has become such a crushing burden and is felt by him to be altogether unfair taxation. I put it to the Chancellor of the Exchequer and to hon. Members opposite that they would be far more likely to succeed in their endeavour to secure that all wealth should pay its fair share of taxation, if they got the sense of justice of the individual once more on the side of the State in this matter, just as it is in regard to our
normal system of taxation. If agricultural land paid Death Duties on the revenue which was brought in, and not on its theoretical value, there would be no need for these estate companies and they would disappear. The right hon. Gentleman would find that owners would not go to the trouble of trying to get in the same boat as ordinary commercial firms, such as Selfridge's, or Morris's, and you would not be chasing them through this legal tangle, but if you persist in taxing agricultural land at a rate which, judged from——

The DEPUTY-CHAIRMAN: The Noble Lord is really discussing the general principles of the Clause, and not the Amendment now before the Committee.

Viscount WOLMER: I bow entirely to your Ruling, but this Amendment, I submit, does raise the whole question of retrospective legislation, in that it seeks to limit the effect of the Clause to transactions which may take place in the future. This Clause comes down upon transactions which have taken place in the past, hut, in view of your Ruling, I will not pursue that general topic. I only want to say, in conclusion, that the ordinary language used by some hon. Members opposite, and I think by the Attorney-General more than once, is a type of language which is intensely resented by the agricultural interests. I am afraid it may be a matter of small moment to some hon. Members opposite, but I can assure them that people do not like being called tax dodgers when they are conscious of having done nothing to deserve that epithet.
I hope my hon. Friend will press this Amendment, because I think it is an act of injustice to attempt to break up these estate companies, which have been formed with the perfectly legitimate object of pooling the interests of the life tenants and the remainder men and getting their benefit in the form of shares, on which they are liable to pay taxation for every penny that they receive. The right hon. Gentleman tries to break up these companies, and I believe it is unjust to the individuals concerned, and that it will be extremely bad for agriculture as a whole. One thing that has kept agriculture going in the past has been the amount of capital that the landlord has had at his disposal
with which to help his tenants. That capital has been gradually whittled away, and the result of this Clause will be further to destroy that capital. That is going to hit, not only the landowner, but, hardest of all, his tenants and the people working on the farms, and it is going to be an act Which will cause the gravest injury to agriculture in this country.

Captain BOURNE: I wish to support the Amendment, because, although the Attorney-General objects to the use of the word "retrospective" in connection with this Clause, I think it may be termed "retroactive." I admit that we have a good many precedents where Parliament has altered the law relating to Death Duties, and under which people in many cases have spent large sums of money, as they have done in the case of these companies, on the understanding that the law was in one form, and subsequently the Treasury has pocketed that money and proceeded to alter the law to the disadvantage of these people. In ordinary commercial life that would be called very sharp practice. I do not deny the right of Parliament to do it, but I think that Parliament should try to observe the bargain that it tacitly makes with its citizens. In the case of these companies, it has accepted Stamp Duty on their transactions at the time when they were made. It is not disputed that they were absolutely legal, and it is undesirable that Parliament should subsequently penalise people who have taken a perfectly legitimate method of avoiding taxation.
There is no obligation on the citizen whatever so to arrange his affairs as to be liable to the highest amount of taxation payable. The citizen is perfectly free to arrange to pay the least amount of tax to which he is legally liable, and I do not think that doctrine will be disputed, but it is unfair for the Government to get Stamp Duty and then to penalise them in this way. For that reason alone, if for no other, I feel that this legislation is at least undesirable. Also I cannot help feeling that the effect of altering the law in this way will be to have an unsettling effect. This particular Clause merely affects people who happen to own settled property, but if you do that, who is to say that you will not later be proposing
to pass retroactive legislation affecting coal merchants or fishmongers? Nobody will deny the right of this House to do it. We could undoubtedly pass legislation avoiding every contract that has been entered into in this country, but no one would suggest that such legislation would be desirable, and we ought to be very careful before we legislate to interfere with anything which, when it was undertaken, was perfectly legitimate.
When we discussed the last Clause on a somewhat similar Amendment, the question was asked as to how far back the Inland Revenue were going to dig into these matters, and the Chancellor of the Exchequer suggested that he might consider, between now and the Report stage, the advisability of introducing some limitation, so that the Clause should not apply to companies formed, say, before the end of the War. If he is going to take such action in respect of Clause 29, I think he might very well consider the desirability of taking it in regard to Clause 30. The particular class of companies which I understand the right hon. Gentleman wishes to tax is one which has only grown up in very recent years in the form which is obnoxious to the Inland Revenue. So long as the practice was legal, people were entitled to make these companies, but I will not pursue that argument now. There are certain estate companies, I think, which are a good deal older than the one-man company which the Clause attacks, and I suggest that it would be convenient for all concerned that the right hon. Gentleman should at least put a limitation on the distance back into which investigations could be carried. I might suggest 1918 or 1921 as the limit, and that he should leave any transaction before that date as valid and binding.

Mr. LEIF JONES: I suggest that the Amendment goes further than the Mover really intends, because it would exempt companies created only for the purpose of tax dodging. The Noble Lord the Member for Aldershot (Viscount Wolmer) was careful to say—and I agreed with him—that he had no wish to help such people escape paying tax, but the effect of the Amendment would undoubtedly be to enable such people to evade the tax. The Attorney-General gave us a case yesterday where such a company had
been formed, and nobody would have any sympathy with the person who formed that, company, yet this Amendment would exempt him.

Viscount WOLMER: It is not enough for the promoters of the Bill to point to scandalous cases that would be redressed by the Clause. What they have to show is that the Clause would only catch various objectionable cases, and no others. Our contention is that this Clause as drafted will cover a number of transactions which are innocent.

Mr. JONES: If that were intended, I should not support the Clause. All that is required is that these companies, if they are not tax-dodgers, can prove that they are not tax-dodgers. The injustice, if there be any, is that that onus is laid upon them by the Clause, but provided that they are merely land companies, or estates which have been genuinely converted for the purposes described by the Noble Lord, I do not think that there is anything in this Clause to touch them at all. I am going on that happy assumption, and I hope that experience will prove me right. This Amendment goes further than that, however, and will actually be a protection to those whom we all agree the Chancellor of the Exchequer ought to tax in the interest of the other taxpayers.

Mr. ATKINSON: I do not think that the right hon. Gentleman can appreciate what the Clause does. If this penalty were going to be imposed on the man who had sought, even in the past, to evade his obligations, I would not say a word; or even if it imposed a penalty only on a one-man company, meaning by that a company in which that individual alone was concerned, or in which he and an immediate member of his family were concerned, I would not object; but the companies under this Bill which will be taxed in that way are companies in which a great many other people may be interested. These people, through their company, have entered in the past into a bargain of an absolutely legitimate kind for a purchase with full consideration, but as it happens, the terms agreed upon were perhaps, in their own interest, not the paying of cash all at once at the time of the sale, but an agreement to pay by instalments. In cases of that kind, neither the individual nor the com-
pany has the slightest idea of evading duty, at any rate, so far as the company is concerned, and it would not be a matter that would even interest them.
Here you have a great many people combined in the form of a company making a purchase of land of equitable terms with full consideration, but not paying the purchase money all at once, and then this Bill is passed, the man dies, and they suddenly find that they are liable for, perhaps, a very heavy payment. It is unfair that people, who really gain nothing by the transaction in the sway of evading duties, who are quite unconnected with the supposed wrongdoer who is seeking to evade duties, who are entering into a carefully considered bargain, should suddenly find all their calculations upset, and have to pay a huge sum by way of additional purchase price in the form of Estate Duty. I agree that it is not enough for the Government to say that it covers this and that bad case, but if the form of words which they adopt makes it apply to a great many other cases, where the Clause operates unjustly it becomes important to cut it down to such a form of expression that it does not work injustice. If my right hon. Friend the Member for Camborne (Mr. Leif Jones) thinks that this Clause will not do an injustice of that kind, he is very mistaken. If he will read paragraph (a), he will see that, in supporting this Clause, he will be a party to imposing a tax upon companies who have entered, with a great many other people interested, into transactions in the past against which nothing can be said from their point of view, and who will suddenly find that they are taxed in this way. That is why I submit that this Amendment ought to be accepted.

Dr. BURGIN: This is an extremely technical matter, and it occurs to me that it might simplify matters if I asked the learned Attorney-General whether I entirely understand this Clause in its bearing upon this Amendment. One cannot, of course, be uninfluenced by the fact that there are later Amendments on the Paper, which we cannot now discuss. One of them which will entirely alter the meaning of this Clause, stands in the name of the Chancellor of the Exchequer. The Clause, as drafted, relates clearly only to transactions which take place
after the Bill becomes an Act, where property is transferred. We cannot blind ourselves to the fact that the Chancellor has seen that, and the word "is" is going to be changed to "was." It will do away with the point that occurred to my mind. Obviously, if the Clause had remained as drafted, this Amendment would be unnecessary, because on the plain reading of the English, where property is transferred it can only mean after this Bill is passed. That is not the point which we are for the moment discussing. It is rather important that we should remember how far the law has already gone in dealing with matters in relation to settled estates. As the Attorney-General is aware, Section 11 of the Finance Act, 1900, has already dealt with the case of a man who surrendered settled property to a remainderman within a certain number of years of his death. What was not dealt with was a transfer by the settler to a remainderman, and, both concurring, sold to a third party; and the object of this Clause is to fill that gap. I make that point because the note to this Clause is singularly inaccurate. It is not a transfer of life-interest; it is the absence of certain conditions when there is an entire settled estate transfer. I only make this point by way of explanation.
This Amendment raises the whole question whether it is ever right to interfere with a transaction, legal and valid at the time it was made, and to impose some new conditions upon it. The Amendment raises the whole question

in Clause 29 as to whether Parliament is right in penalising somebody at a date subsequent to the time when he made a transaction, which was valid and legal at the time. It is undoubtedly within the power of this House and of this Committee to do that. Whether it is wise and expedient is a matter for the House on the suggestion of the Government of the day, and the Government of the day here have told us by their whole series of Clauses between 29 and 33 that in their opinion, owing to the growth of these companies, apparently with the object of tax evasion, it is necessary for them to strike backward and not merely forward. That is the opinion underlying the whole of these Clauses. I have objected to Clause 29 on that ground, and it follows that I must object, to the best of my lights, to this Clause on the same ground. This Amendment raises in succinct terms the whole question as to whether this should apply only to the future, in which case many companies will escape, or whether it is to apply to and include certain notorious instances which are known to the Committee, and which it is the intention of the Clause should be included. For the reasons I leave given, and finding that I am rightly understanding the point in dispute, I am obliged to support this Amendment in principle.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 114; Noes, 257.

Division No. 402.]
AYES.
[8.34 p.m.


Acland-Troyte, Lieut.-Colonel.
Culverwell, C. T. (Bristol, West)
Haslam, Henry C.


Allen, Sir J. Sandeman (Liverp'l., W.)
Dalkeith, Earl of
Henderson, Capt. R. R. (Oxf'd, Henley)


Alien, W. E. D. (Belfast, W.)
Davies, Dr. Vernon
Hennessy, Major Sir G. R. J.


Atkinson, C.
Davies, Maj. Geo. F. (Somerset, Yeovil)
Herbert, Sir Dennis (Hertford)


Balfour, George (Hampstead)
Dixon, Captain Rt. Hon. Herbert
Hills, Major Rt. Hon. John Waller


Balfour, Captain H. H. (I. of Thanet)
Dugdale, Capt. T. L.
Hurd, Percy A.


Betterton, Sir Henry B.
Edmondson, Major A. J.
Hutchison, Maj.-Gen. Sir R.


Bevan, S. J. (Holborn)
Elliot, Major Walter E.
Jones, Sir G. W. H. (Stoke New'gton)


Bird, Ernest Roy
England, Colonel A.
Kindersley, Major G. M.


Birkett, W. Norman
Everard, W. Lindsay
King, Commodore Rt. Hon. Henry D.


Bourne, Captain Robert Croft
Ferguson, Sir John
Lamb, Sir J. O.


Bowater, Col. Sir T. Vansittart
Ford, Sir P. J.
Law, Sir Alfred (Derby, High Peak)


Bowyer, Captain Sir George E. W.
Forestier-Walker, Sir L.
Lewis, Oswald (Colchester)


Braithwaite, Major A. N.
Fremantle, Lieut.-Colonel Francis E.
Long, Major Eric


Brass, Captain Sir William
Galbraith, J. F. W.
Lymington, Viscount


Brown, Col. D. C. (N'th'l'd., Hexham)
Gault, Lieut.-Col. Andrew Hamilton
McConnell, Sir Joseph


Buchan, John
George, Megan Lloyd (Anglesea)
Maitland, A. (Kent, Faversham)


Bullock, Captain Malcolm
Graham, Fergus (Cumberland, N.)
Margesson, Captain H. D.


Burgin, Dr. E. L.
Grattan-Doyle, Sir N.
Merriman, Sir F. Boyd


Burton, Colonel H. W.
Greaves-Lord, Sir Walter
Monsell, Eyres, Com. Rt. Hon. Sir B.


Christie, J. A.
Greene, W. P. Crawford
Morrison, W. S. (Glos., Cirencester)


Colfox, Major William Philip
Grenfell, Edward C. (City of London)
Nathan, Major H. L.


Courthope, Colonel Sir G. L.
Hacking, Rt. Hon. Douglas H.
Nelson, Sir Frank


Cowan, D. M.
Hall, Lieut.-Col. Sir F. (Dulwich)
Oliver, P. M. (Man., Blackley)


Cranborne, Viscount
Harvey, Major S. E. (Devon, Totnes)
Ormsby-Gore, Rt. Hon. William


Percy, Lord Eustace (Hastings)
Sandeman, Sir N. Stewart
Turton, Robert Hugh


Peto, Sir Basil E. (Devon, Barnstaple)
Sassoon, Rt. Hon. Sir Philip A. G. D.
Vaughan-Morgan, Sir Kenyon


Pownall, Sir Assheton
Sinclair, Sir A. (Caithness)
Wallace, Capt. D. E. (Hornsey)


Ramsbotham, H.
Smith, Louis W. (Sheffield, Hallam)
Ward, Lieut.-Col. Sir A. Lambert


Rawson, Sir Cooper
Smith, R. W. (Aberd'n & Kinc'dine, C.)
Wayland, Sir William A.


Reid, David D. (County Down)
Smith-Carington, Neville W.
Wells, Sydney R.


Remer, John R.
Smithers, Waldron
Wilson, G. H. A. (Cambridge U.)


Rentoul, Sir Gervals S.
Somerville, D. G. (Willesden, East)
Wolmer, Rt. Hon. Viscount


Reynolds, Col. Sir James
Steel-Maitland, Rt. Hon. Sir Arthur
Womersley, W. J.


Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Stuart, Hon. J. (Moray and Nairn)
Worthington-Evans, Rt. Hon. Sir L.


Ross, Major Ronald D.
Thomas, Major L. B. (King's Norton)
Young, Rt. Hon. Sir Hilton


Ruggles-Brise, Lieut.-Colonel E. A.
Titchfield, Major the Marquess of



Russell, Alexander West (Tynemouth)
Train, J.
TELLERS FOR THE AYES.—


Samuel, A. M. (Surrey, Farnham)
Tryon, Rt. Hon. George Clement
Sir George Penny and Sir Victor Warrender.


NOES.


Adamson, Rt. Hon. W. (Fife, West)
Gould, F.
McGovern, J. (Glasgow, Shettleston)


Adamson, W. M. (Staff., Cannock)
Graham, D. M. (Lanark, Hamilton)
McKinlay, A.


Addison, Rt. Hon. Dr. Christopher
Graham, Rt. Hon. Wm. (Edin., Cent.)
MacLaren, Andrew


Aitchison, Rt. Hon. Craigie M.
Gray, Milner
Maclean, Neil (Glasgow, Govan)


Alexander, Rt. Hon. A. V. (Hillsbro')
Grenfell, D. R. (Glamorgan)
McShane, John James


Alexander, Sir Wm. (Glasgow, Cent'l)
Griffiths, T. (Monmouth, Pontypool)
Malone, C. L'Estrange (N'thampton)


Alpass, J. H.
Groves, Thomas E.
Mander, Geoffrey le M.


Ammon, Charles George
Grundy, Thomas W.
Mansfield, W.


Arnott, John
Hall, F. (York, W. R., Normanton)
March, S.


Aske, Sir Robert
Hall, G. H. (Merthyr Tydvil)
Marcus, M.


Attlee, Clement Richard
Hall, Capt. W. P. (Portsmouth, C.)
Markham, S. F.


Ayles, Walter
Hardie, George D.
Marley, J.


Baker, John (Wolverhampton, Bilston)
Harris, Percy A.
Marshall, Fred


Baldwin, Oliver (Dudley)
Hartshorn, Rt. Hon. Vernon
Mathers, George


Barr, James
Hastings, Dr. Somerville
Matters, L. W.


Bellamy, Albert
Haycock, A. W.
Maxton, James


Benn, Rt. Hon. Wedgwood
Henderson, Arthur, Junr. (Cardiff, S.)
Messer, Fred


Bennett, Capt. Sir E. N. (Cardiff C.)
Henderson, Thomas (Glasgow)
Middleton, G.


Bennett, William (Battersea, South)
Henderson, W. W. (Middx., Enfield)
Millar, J. D.


Benson, G.
Herriotts, J.
Milner, Major J.


Bentham, Dr. Ethel
Hirst, G. H. (York W. R. Wentworth)
Morgan, Dr. H. B.


Bevan, Aneurin (Ebbw Vale)
Hirst, W. (Bradford, South)
Morley, Ralph


Bondfield, Rt. Hon. Margaret
Hoffman, P. C.
Morris, Rhys Hopkins


Bowen, J. W.
Horrabin, J. F.
Morrison, Herbert (Hackney, South)


Bowerman, Rt. Hon. Charles W.
Hudson, James H. (Huddersfield)
Morrison, Robert C. (Tottenham, N.)


Brooke, W.
Hunter, Dr. Joseph
Mort, D. L.


Brothers, M.
Isaacs, George
Moses, J. J. H.


Brown, C. W. E. (Notts, Mansfield)
Jenkins, W. (Glamorgan, Neath)
Mosley, Lady C. (Stoke-on-Trent)


Brown, Ernest (Leith)
John, William (Rhondda, West)
Mosley, Sir Oswald (Smethwick)


Brown, Rt. Hon. J. (South Ayrshire)
Johnston, Thomas
Muff, G.


Buchanan, G.
Jones, F. Llewellyn- (Flint)
Muggeridge, H. T.


Burgess, F. G.
Jones, Henry Haydn (Merioneth)
Murnin, Hugh


Buxton, C. R. (Yorks. W. R. Elland)
Jones, J. J. (West Ham, Silvertown)
Naylor, T. E.


Caine, Derwent Hall-
Jones, Rt. Hon. Leif (Camborne)
Newman, Sir R. H. S. D. L. (Exeter)


Cameron, A. G.
Jones, Morgan (Caerphilly)
Noel Baker, P. J.


Cape, Thomas
Jowett, Rt. Hon. F. W.
Owen, Major G. (Carnarvon)


Charleton, H. C.
Jowitt, Rt. Hon. Sir W. A.
Palin, John Henry


Chater, Daniel
Kelly, W. T.
Paling, Wilfrid


Clarke, J. S.
Kennedy, Thomas
Palmer, E. T.


Cluse, W. S.
Kenworthy, Lt.-Com. Hon. Joseph M.
Parkinson, John Alien (Wigan)


Clynes, Rt. Hon. John R.
Kinley, J.
Perry, S. F.


Cocks, Frederick Seymour
Kirkwood, D.
Pethick-Lawrence, F. W.


Compton, Joseph
Lang, Gordon
Phillips, Dr. Marion


Cove, William G.
Lansbury, Rt. Hon. George
Pole, Major D. G.


Daggar, George
Lathan, G.
Potts, John S.


Dallas, George
Law, Albert (Bolton)
Price, M. P.


Davies, E. C. (Montgomery)
Law, A. (Rosendale)
Quibell, D. F. K.


Dickson, T.
Lawrence, Susan
Ramsay, T. B. Wilson


Dukes, C.
Lawrie, Hugh Hartley (Stalybridge)
Raynes, W. R.


Duncan, Charles
Lawson, John James
Richards, R.


Ede, James Chuter
Lawther, W. (Barnard Cattle)
Richardson, R. (Houghton-le-Spring)


Edmunds, J. E.
Leach, W.
Riley, Ben (Dewsbury)


Edwards, C. (Monmouth, Bedwellty)
Lee, Frank (Derby, N. E.)
Ritson, J.


Edwards, E. (Morpeth)
Lee, Jennie (Lanark, Northern)
Roberts, Rt. Hon. F. O. (W. Bromwich)


Egan, W. H.
Lees, J.
Romeril, H. G.


Elmley, Viscount
Lewis, T. (Southampton)
Rosbotham, D. S. T.


Evans, Capt. Ernest (Welsh Univer)
Lloyd, C. Ellis
Rowson, Guy


Foot, Isaac
Logan, David Gilbert
Russell, Richard John (Eddisbury)


Freeman, Peter
Longbottom, A. W.
Salter, Dr. Alfred


Gardner, B. W. (West Ham, Upton)
Longden, F.
Samuel, Rt. Hon. Sir H. (Darwen)


Gardner, J. P. (Hammersmith, N.)
Lowth, Thomas
Sanders, W. S.


Gibbins, Joseph
Lunn, William
Sandham, E.


Gibson, H. M. (Lancs, Mossley)
Macdonald, Gordon (Ince)
Sawyer, G. F.


Gill, T. H.
MacDonald, Rt. Hon. J. R. (Seaham)
Scrymgeour, E.


Gillett, George M.
MacDonald, Malcolm (Bassetlaw)
Scurr, John


Glassey, A. E.
McElwee, A.
Sexton, James


Gossling, A. G.
McEntee, V. L.
Shaw, Rt. Hon. Thomas (Preston)




Sherwood, G. H.
Stewart, J. (St. Rollox)
Wellock, Wilfred


Shield, George William
Strachey, E. J. St. Loe
Welsh, James (Paisley)


Shiels, Dr. Drummond
Sullivan, J.
Welsh, James C. (Coatbridge)


Shillaker, J. F.
Sutton, J. E.
West, F. R.


Shinwell, E.
Taylor, R. A. (Lincoln)
Westwood, Joseph


Short, Alfred (Wednesbury)
Thurtle, Ernest
White, H. G.


Simmons, C. J.
Tinker, John Joseph
Whiteley, Wilfrid (Birm., Ladywood)


Sinkinson, George
Tout, W. J.
Williams, David (Swansea, East)


Sitch, Charles H.
Townend, A. E.
Williams, Dr. J. H. (Llanelly)


Smith, Ben (Bermondsey, Rotherhithe)
Vaughan, D. J.
Wilson, C. H. (Sheffield, Attercliffe)


Smith, Frank (Nuneaton)
Viant, S. P.
Wilson, J. (Oldham)


Smith, H. B. Lees- (Keighley)
Walkden, A. G.
Wilson R. J. (Jarrow)


Smith, Rennie (Penistone)
Walker, J.
Winterton, G. E. (Leicester, Loughb'gh)


Smith, Tom (Pontefract)
Wallace, H. W.
Wise, E. F.


Smith, W. R. (Norwich)
Wallhead, Richard C.
Wood, Major McKenzie (Banff)


Snell, Harry
Walters, Rt. Hon. Sir J. Tudor
Wright, W. (Rutherglen)


Snowden, Rt. Hon. Philip
Watkins, F. C.
Young, R. S. (Islington, North)


Sorensen, R.
Watson, W. M. (Dunfermline)



Stamford, Thomas W.
Watts-Morgan, Lt.-Col. D. (Rhondda)
TELLERS FOR THE NOES.—


Stephen, Campbell
Wedgwood, Rt. Hon. Josiah
Mr. Hayes and Mr. William Whiteley.

Sir B. MERRIMAN: I beg to move, in page 27, line 22, to leave out the words "at any time," and to insert instead thereof the words "within three years from the date of his death."
At the time when this Amendment was put down, the Government Amendment was not there, and as the Clause originally stood it was immaterial whether the transfer to the company was a transfer by the deceased or not. The property might have gone through two or three hands, and therefore it was necessary to have some time limit. The question whether my Amendment is necessary or not depends upon the replies to certain questions. What is intended to be the significance of the omission of the words "at any time"? Does it mean that the time at which the deceased had the interest is limited to the time of the transfer or does it refer to the time of the death or to some other time? Secondly, what is the exact intention of inserting the words, "by the deceased and the person interested in the remainder or the reversion." Are the words intended to ensure that, although in form there may be two separate transactions the Clause only operates when, in substance, the transaction is a joint transfer by the tenant for life and the reversioner?

The ATTORNEY-GENERAL: I think it will be convenient for me to reply now. In the case of property in strict settlement, the tenant for life has wide powers to sell and so have the trustees under the settlement or the Settled Lands Act. In that case the money they realised goes back into strict settlement, and the machinery of this Act is not necessary. Accordingly, such transactions
are taken out of the way. The case in which money will be brought back into strict settlement would normally be a case in which the sale is not a sale by the tenant for life., or the remainderman, but a sale by the trustees or the tenant for life alone acting by virtue of the powers under the settlement, or under the Settled Lands Act. The reason why we strike out the words "at any time" is that it occurred to us that those words might have an effect which we never intended. We want the Clause to deal with the case where a deceased person with a life interest in property had transferred property in which he had power of transfer at the time. Take, for example, two persons A and B, A being the life tenant and B being the remainderman. B sells to C and C is not a company but an individual, and they receive full consideration, and put the money back into strict settlement. That is not a transfer within the scope of this Clause at all. Our proposal is meant to meet that kind of case.

Sir B. MERRIMAN: I would like to ask another question to make the point perfectly clear. In the ease of the trustee of the settlement selling the interest of the tenant for life and some subsequent and quite unconnected sale of his interest by the reversioner to the company, I understand the Attorney-General is not dealing with that transaction at all, but only with the case in which the two concur in the sale of both interests.

The ATTORNEY-GENERAL indicated assent.

Sir B. MERRIMAN: In view of the explanation that has been given by the Attorney-General, I do not think it necessary for me to press my Amendment.

Amendment, by leave, withdrawn.

Amendment made: In page 27, line 22, leave out the words "at any time."—[Mr. P. Snowden.]

Mr. STUART BEVAN: I beg to move, in page 27, line 23, after the word "interest," to insert the words "in possession."
The Clause as it stands does not require a life interest or estate to have been an interest or estate in possession, and, as I read it, it would apply on the death of a second, third, fourth or later tenant for life who died during the lifetime of the tenant in possession. The result would be that the property which had passed to the company would in those circumstances have to pay duty on the death of each of the successive life tenants. I should be glad to hear from the Attorney-General whether he agrees with that as being the construction of the Clause as it stands. If that be the construction of the Clause, as I suggest it is, there would be no difficulty, by the insertion of the words "in possession," in making the position perfectly plain, so as not to expose the company to the liability of having to pay over and over again so long as there are successive tenants for life.

The ATTORNEY-GENERAL: I am not quite sure that I have got the point which has been put by the hon. and learned Member, but perhaps he will allow me to see if I have it correctly. Wherever you have, under the present law, the case of a series of interests—say a life interest for A, and upon the death of A, B taking a life interest, and thereafter, upon the death of B, the property passing to C, and so on—the existing law is this: A is in possession of the property, and, consequently, on the death of A, the property passes and Estate Duty is payable; and the Committee, of course, will realise that it is payable, not merely on the value of the life interest, but on the value of the property in which A had a life interest. Then, after the death of A, if B succeeds, equally, under the existing law, on the death of B also, Estate Duty would have to be paid, and so on down the line. Suppose, however, that B in my illustration dies before A; that is to say, while A is still in enjoyment of the property, B dies, so that B never acquires his estate in possession. Then, under the existing
law, B does not have to pay Estate Duty. That is provided for by Sub-section (5) of Section 5 of the Finance Act, 1894. Our intention is not to alter that law, but to reproduce it, and I think it will be seen that we do so. It will be seen that Sub-section (1, b) of Clause 30 provides that, where there is a transfer of property,
the property shall be deemed for the purposes of Estate Duty to pass on the death in like manner as if the estate or interest of the deceased therein had continued until the death.
We are confident that these words will merely reproduce the existing law as it would have been in the case which I have illustrated, of B dying before A.

9.0 p.m.

Mr. BEVAN: I am much obliged to the Attorney-General for his explanation. I am in complete agreement with the first part of it; but, taking the case of A and B, the position under Clause 30 is that B, who never has an estate or interest in possession, inasmuch as he dies in A's lifetime, has none the less an estate or interest in the property, and, therefore, he is directly hit by Sub-section (1) of Clause 30. The death of a man, therefore, who has no interest or estate in possession, brings the Clause into operation against the company, and that is what I am anxious to prevent by the insertion, after the words "estate or interest," of the words "in possession." With regard to the provision to which the Attorney-General has referred in Sub-section (1, b) of Clause 30, I confess that I am unable to read it in the same manner as the Attorney-General. It seems to me to have no application to the case which I am putting, where B, who has never been in possession, dies, and brings into operation against the company the provisions of Sub-section (1) of Clause 30. The matter could be made quite clear by the insertion of the words which I suggest.

The ATTORNEY-GENERAL: I am glad to say that I am advised that I am right in the construction that I have given, but equally, if there is any doubt about it, it had better be made plain, and, accordingly, I will go into the question and see if there is any doubt.

Mr. BEVAN: I am very much obliged to the Attorney-General. In those circumstances, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendment made: In page 27, line 23, leave out the word "is," and insert instead thereof the word "was."—[Mr. P. Snowden.]

Mr. P. SNOWDEN: I beg to move, in page 27, line 24, after the word "transferred," to insert the words:
by the deceased and the person interested in the remainder or reversion.
The object of inserting these words is to make perfectly clear a point which was referred to earlier.

Sir BASIL PETO: I notice that this is one of the cases in which the Chancellor of the Exchequer has benefited from the careful scrutiny that has been given to this Clause as it was originally drafted, and it is interesting to note, although the Chancellor of the Exchequer did not mention it, that the words which it is now proposed to insert are identical with those proposed in an Amendment which stands later on the Paper in the name of my right hon. Friend the Member for St. George's (Sir L. Worthington-Evans) and other hon. Members on this side. I am very pleased that the Chancellor of the Exchequer has adopted the words which we have suggested, and has thereby clarified the purpose of the Clause.

Mr. W. S. MORRISON: I should like to ask the Chancellor of the Exchequer to consider whether this Clause, as he now proposes to amend it, covers the case of the Scottish heir of entail. I do not ask him for an answer on this point at the moment, but I hope that he will consider it. It seems to me that the words suggested in this Amendment are not apt to describe the position of a Scottish heir of entail, since you can have a Scottish heir of entail with no person at all interested in the reversion or remainder, because the property is disentailed. You might have a case such as this: Suppose that A were a Scottish heir of entail, and entitled to a life interest. He agrees to sell the property. He obtains the leave of the Court, disentails the property, and sells to some third person, X, who then undoubtedly becomes the person interested in the reversion or remainder,
because he is the person who has the whole interest in the property, the whole thing having been sold. Then, supposing that X, who has bought the property in this way, transfers it to a company in which A has no conceivable interest of any kind, and X, who has bought the property, does the transfer, then, if A dies within three years—I say three years because of the saving in the following paragraph of the Sub-section—having entirely denuded himself of all interest in the property, might not this position arise, that the company would have to pay duty, although it did not acquire the property by any tax-dodging device, and also that A's estate would have to pay duty on the purchase price of the property? It is a point of some difficulty. I suggest that the right hon. Gentleman would find it worth his while to consider it and see if the words he uses will meet not only an English settlement but the slightly more complicated Scotch case.

Mr. A. M. SAMUEL: I do not know, Mr. Dunnico, whether you are going to call a later Amendment to leave out the words "whether directly or indirectly." If they are left in, will they not confuse the meaning of the words the Chancellor is now putting in? If they will not, I should like to hear from the Chancellor why he thinks they will not confuse the issue. I think they ought to come out unless he can give us a very valid reason for keeping them in.

The DEPUTY-CHAIRMAN: I intend to call on the right hon. Gentleman.

Amendment agreed to.

Sir A. STEEL-MAITLAND: I beg to move, in page 27, line 24, to leave out the word "whether."
I am in this difficulty. If we confine ourselves to the word "directly," I think there may be evasion, but, on the other hand, if you have "whether directly or indirectly" without any words safeguarding it, there may be some very undesirable consequences to people who are themselves quite innocent. Take a case such as the Attorney-General has given. A, a tenant for life, may have transferred to B, and there are a series of transactions—C has transferred to D and D has again transferred to a company E. D may have taken payment otherwise than in cash and E may not even know of the existence of A. In a case like that you
may have a good deal of genuine hardship. There are one or two other cases of the kind which may perfectly naturally occur in the ordinary course of business and, while I have grave doubt with regard to the immediate effects of the two Amendments I suggest, because I think they open the door too wide, yet as it now stands, a good deal of injustice might be done and I would ask whether the Government could see their way, if we do not press the Amendment, to suggest words which would meet such a case as I have given, and others that one could mention, without unduly opening the door to evasion.

Viscount WOLMER: Would it not be better really to leave out all these words, "whether directly or indirectly"? If the transaction is a transfer from A to E, an intervening person is merely an agent of A. If it is a transfer from one to another, the fact that he employs intermediaries, who are merely acting on behalf of A, does not prevent it being a transfer from A to E. The people who intervene are agents either of A or of E and, therefore, it is a transfer from A to E. It all depends on the facts of the particular case. If it is not a transfer from A to E, but a series of separate transactions, it is not a transfer and, therefore, I should have thought these words, "whether directly or indirectly," were quite unnecessary and simply confusing. As long as it is a transfer from a man to a company, or to anybody else, whether he employs an agent or not does not make any difference.

Mr. A. M. SAMUEL: I do not want to go down to so narrow a point as my Noble Friend has adduced, but, on broad lines, is it good legislation to have an indefinite expression like this? I do not know whether the Attorney-General can tell us what is an indirect transfer. We on this side do not know. Is it right to throw upon the taxpayer the necessity to go to the courts to get the word "indirect" defined, when we could make a much clearer definition here in Committee?

Sir B. PETO: Last night we discussed exactly the same point, and I notice to-day, in going through the new Clause 12 which the Government have put down, these same words in that Clause. The Attorney-General has told us there are
plenty of cases in previous Income Tax Acts where these words occur. We have no desire to delay the proceedings and we do not want the same words to come up again and again, so I suggest that we should have a general statement from the Attorney-General as to why it is necessary to introduce these apparently vague words which may, however, be necessary to cover certain contingencies and which have been used in common practice in previous Income Tax Acts.

The ATTORNEY-GENERAL: We had exactly the same discussion last night, and the hon. and learned Gentleman the Member for Moss Side (Sir G. Hurst) expressed the view, which I had previously expressed, that the words were necessary, for this reason. The words of a taxing Act have to be construed strictly in favour of the taxpayer. Supposing you have this case. Property is transferred, not to the company but to some individual who is in fact trustee for the company. In a case like that it would be very open to argument, without these words, whether you could say that was a transfer to the company. In truth, there are more complicated reasons which, I think, make these words necessary. For instance, one way in which you might transfer property is that you might transfer it to a man as trustee, to hold the property for such use as you should subsequently by deed appoint, and then you might by deed appoint that he should transfer the property to a company. A case of that kind came to my knowledge only the other day. What had been done was the transfer of the property to someone to hold for such use as should by deed be appointed, and it was a clear case of indirect transfer. I would point out, in answer to the right hon. Gentleman, that if you transfer it, say, from "A" to "B," and have nothing to do with the company at all, no human being could say that "A" had transferred indirectly. It would be out of the question altogether. For the reasons which I gave last night, I adhere to the view I expressed, that the effect of leaving out the phrase "whether directly or indirectly" might lead to evasion in a form which no right hon. Gentleman or hon. Gentleman opposite would desire or contemplate.

Mr. S. BEVAN: May I point out that cases where there is the intervention of
a trustee are sufficiently covered by the provision where property is transferred "to or for the benefit of any private company." Of course, if transferred to a trustee to hold it would clearly be a transfer not to, but for the benefit of, the company. If the Clause read "transferred to or for the benefit of any private company" the cases instanced by my hon. and learned Friend would be fully covered.

Mr. CROOM-JOHNSON: I was rather under the impression that as a result of our discussion las night the Attorney-General promised to consider this question on Clause 29 on the Report stage. I agree with the view which he has expressed, and which, I think, was expressed by my hon. and learned Friend the Member for Moss Side (Sir G. Hurst), that some sort of amending words are needed here, and the real point that we are discussing is, whether the words which are being used are words which ought to appear in a Section of this nature in a taxing Statute. I cannot help thinking that the Attorney-General might meet us quite well if he would promise to give the same consideration to the words in this Clause as he has already promised, without binding himself in any way, to give with regard to the words used in Clause 29.

Sir A. STEEL-MAITLAND: The Attorney-General will realise the difficulty we are in, because it is obvious that we must not open the door too wide. On the other hand, the instance which I quoted is not the only instance where people might easily be prejudiced. Could not the learned Attorney-General look at the matter in the same way as he did on the previous occasion? Could he not consider the matter before the Report stage? If he is prepared to do so, I do not wish to press the Amendment to a Division. Of course, it will not bind him.

The ATTORNEY-GENERAL: If I were to assent to the proposition on the invitation which has been given to me by the right hon. Gentleman, I think I might be in danger of misleading the Committee if I did not tell them that since last night I have been looking into the question of the phrase "whether directly or indirectly," in view of the promise which I made yesterday to consider the matter on the Report stage. I find, as I anticipated, that the words have frequently appeared in taxing Acts and that there is no precedent for the substitution of other words. I am advised that it is better to stick to the phrase "whether directly or indirectly." Having come to that conclusion in the light of what I said last night, it would perhaps be misleading the Committee if I were to repeat the promise which I made last night.

Sir A. STEEL-MAITLAND: Is it not really better to leave out the words "whether directly or indirectly"? The Chancellor of the Exchequer has sometimes said that you must leave a good deal more than many Members of the House are willing to do to the discretion of the executive acting on the advice of the Inland Revenue authorities, as to whether action should be taken or not in a particular case. The presence of the words "whether directly or indirectly" almost forces action to be taken, possibly in cases in which no Chancellor of the Exchequer, either the present Chancellor of the Exchequer or any succeeding Chancellor of the Exchequer, would wish to do so. I do not know whether the Attorney-General is of the same opinion. It seems to me that they would have the powers they want without having these words in the Clause at all.

Question put, "That the word 'whether' stand part of the Clause."

The Committee divided: Ayes, 268 Noes, 122.

Division No. 403.]
AYES.
[9.19 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Ayles, Walter
Bevan, Aneurin (Ebbw Vale)


Adamson, W. M. (Staff., Cannock)
Baker, John (Wolverhampton, Bilston)
Birkett, W. Norman


Addison, Rt. Hon. Dr. Christopher
Baldwin, Oliver (Dudley)
Bondfield, Rt. Hon. Margaret


Aitchison, Rt. Hon. Craigie M.
Barr, James
Bowen, J. W.


Alexander, Rt. Hon. A. V. (Hillsbro')
Bellamy, Albert
Bowerman, Rt. Hon. Charles W.


Alpass, J. H.
Benn, Rt. Hon. Wedgwood
Brooke, W.


Ammon, Charles George
Bennett, Capt. Sir E. N. (Cardiff C.)
Brothers, M.


Arnott, John
Bennett, William (Battersea, South)
Brown, C. W. E. (Notts, Mansfield)


Aske, Sir Robert
Benson, G.
Brown, Ernest (Leith)


Attlee, Clement Richard
Bentham, Dr. Ethel
Brown, Rt. Hon. J. (South Ayrshire)


Buchanan, G.
Jones, Morgan (Caerphilly)
Richardson, R. (Houghton-le-Spring)


Burgess, F. G.
Jowett, Rt. Hon. F. W.
Riley, Ben (Dewsbury)


Burgin, Dr. E. L.
Jowitt, Rt. Hon. Sir W. A.
Ritson, J.


Buxton, C. R. (Yorks, W. R. Elland)
Kelly, W. T.
Roberts, Rt. Hon. F. O. (W. Bromwich)


Caine, Derwent Hall-
Kennedy, Thomas
Romeril, H. G.


Cameron, A. G.
Kenworthy, Lt.-Com. Hon. Joseph M.
Rosbotham, D. S. T.


Cape, Thomas
Kinley, J.
Rowson, Guy


Charleton, H. C.
Kirkwood, D.
Russell, Richard John (Eddisbury)


Chater, Daniel
Knight, Holford
Salter, Dr. Alfred


Clarke, J. S.
Lang, Gordon
Samuel, Rt. Hon. Sir H. (Darwen)


Cluse, W. S.
Lathan, G.
Sanders, W. S.


Clynes, Rt. Hon. John R.
Law, Albert (Bolton)
Sandham, E.


Cocks, Frederick Seymour
Law, A. (Rosendale)
Sawyer, G. F.


Compton, Joseph
Lawrence, Susan
Scrymgeour, E.


Cove, William G.
Lawrie, Hugh Hartley (Stalybridge)
Scurr, John


Cowan, D. M.
Lawson, John James
Sexton, James


Daggar, George
Lawther, W. (Barnard Castle)
Shaw, Rt. Hon. Thomas (Preston)


Dallas, George
Leach, W.
Shepherd, Arthur Lewis


Dalton, Hugh
Lea, Frank (Derby, N. E.)
Sherwood, G. H.


Davies, E. C. (Montgomery)
Lee, Jennie (Lanark, Northern)
Shield, George William


Dickson, T.
Lees, J.
Shiels, Dr. Drummond


Dukes, C.
Lewis, T. (Southampton)
Shillaker, J. F.


Duncan, Charles
Lloyd, C. Ellis
Shinwell, E.


Ede, James Chuter
Logan, David Gilbert
Short, Alfred (Wednesbury)


Edmunds, J. E.
Longbottom, A. W.
Simmons, C. J.


Edwards, E. (Morpeth)
Longden, F.
Sinkinson, George


Egan, W. H.
Lowth, Thomas
Sitch, Charles H.


Elmley, Viscount
Lunn, William
Smith, Ben (Bermondsey, Rotherhithe)


England, Colonel A.
Macdonald, Gordon (Ince)
Smith, Frank (Nuneaton)


Evans, Capt. Ernest (Welsh Univer.)
MacDonald, Rt. Hon. J. R. (Seaham)
Smith, H. B. Lees- (Keighley)


Foot, Isaac
MacDonald, Malcolm (Bassetlaw)
Smith, Rennie (Penistone)


Freeman, Peter
McElwee, A.
Smith, Tom (Pontefract)


Gardner, B. W. (West Ham, Upton)
McEntee, V. L.
Smith, W. R. (Norwich)


Gardner, J. P. (Hammersmith, N.)
McGovern, J. (Glasgow, Shettleston)
Snell, Harry


George, Megan Lloyd (Anglesea)
McKinlay, A.
Snowden, Rt. Hon. Philip


Gibbins, Joseph
Maclean, Neil (Glasgow, Govan)
Sorensen, R.


Gibson, H. M. (Lancs, Mossley)
McShane, John James
Stamford, Thomas W.


Gill, T. H.
Malone, C. L'Estrange (N'thampton)
Stephen, Campbell


Gillett, George M.
Mander, Geoffrey le M.
Stewart, J. (St. Rollox)


Glassey, A. E.
Mansfield, W.
Strachey, E. J. St. Loe


Gossling, A. G.
March, S.
Sullivan, J.


Gould, F.
Marcus, M.
Sutton, J. E.


Graham, D. M. (Lanark, Hamilton)
Markham, S. F.
Taylor, R. A. (Lincoln)


Graham, Rt. Hon. Wm. (Edin., Cent.)
Marley, J.
Thurtle, Ernest


Granville, E.
Marshall, Fred
Tinker, John Joseph


Gray, Milner
Mathers, George
Tout, W. J.


Grenfell, D. R. (Glamorgan)
Maxton, James
Townend, A. E.


Griffiths, T. (Monmouth, Pontypool)
Messer, Fred
Trevelvan, Rt. Hon. Sir Charles


Groves, Thomas E.
Middleton, G.
Vaughan, D. J.


Grundy, Thomas W.
Millar, J. D.
Viant, S. P.


Hall, F. (York, W. R., Normanton)
Milner, Major J.
Walkden, A. G.


Hall, G. H. (Merthyr Tydvil)
Morgan, Dr. H. B.
Walker, J.


Hall, Capt. W. P. (Portsmouth, C.)
Morley, Ralph
Wallace, H. W.


Hamilton, Mary Agnes (Blackburn)
Morris, Rhys Hopkins
Wallhead, Richard C.


Hardie, George D.
Morrison, Robert C. (Tottenham, N.)



Harris, Percy A.
Mort, D. L.
Walters, Rt. Hon. Sir J. Tudor


Hartshorn, Rt. Hon. Vernon
Moses, J. J. H.
Watkins, F. C.


Hastings, Dr. Somerville
Mosley, Sir Oswald (Smethwick)
Watson, W. M. (Dunfermline)


Haycock, A. W.
Muff, G.
Watts-Morgan, Lt.-Col. D. (Rhondda)


Hayes, John Henry
Muggeridge, H. T.
Wedgwood, Rt. Hon. Josiah


Henderson, Arthur, Junr. (Cardiff, S.)
Murnin, Hugh
Wellock, Wilfred


Henderson, Thomas (Glasgow)
Nathan, Major H. L.
Welsh, James (Paisley)


Henderson, W. W. (Middx., Enfield)
Naylor, T. E.
Welsh, James C. (Coatbridge)


Herriotts, J.
Newman, Sir R. H. S. D. L. (Exeter)
Westwood, Joseph


Hirst, G. H. (York W. R. Wentworth)
Noel Baker, P. J.
White, H. G.


Hirst, W. (Bradford, South)
Oliver, P. M. (Man., Blackley)
Whiteley, Wilfrid (Birm., Ladywood)


Hoffman, P. C.
Owen, Major G. (Carnarvon)
Whiteley, William (Blaydon)


Hollins, A.
Palin, John Henry
Williams, David (Swansea, East)


Hore-Bellsha, Leslie
Paling, Wilfrid
Williams, Dr. J. H. (Llanelly)


Horrabin, J. F.
Palmer, E. T.
Wilson C. H. (Sheffield, Attercliffe)


Hudson, James H. (Huddersfield)
Parkinson, John Allen (Wigan)
Wilson, J. (Oldham)


Hunter, Dr. Joseph
Perry, S. F.
Wilson, R. J. (Jarrow)


Hutchison, Maj.-Gen. Sir R.
Pethick-Lawrence, F. W.
Winterton, G. E. (Leicester, Loughb'gh)


Isaacs, George
Phillips, Dr. Marion
Wise, E. F.


Jenkins, W. (Glamorgan, Neath)
Pole, Major D. G.
Wood, Major McKenzie (Banff)


John, William (Rhondda, West)
Potts, John S.
Wright, W. (Rutherglen)


Johnston, Thomas
Price, M. P.
Young, R. S. (Islington, North)


Jones, F. Llewellyn- (Flint)
Quibell, D. J. K.



Jones, Henry Haydn (Merioneth)
Ramsay, T. B. Wilson
TELLERS FOR THE AYES.—


Jones, J. J. (West Ham, Silvertown)
Raynes, W. R.
Mr. Charles Edwards and Mr. A. Barnes.


Jones, Rt. Hon. Leif (Camborne)
Richards, R.



NOES.


Acland-Troyte, Lieut-Colonel.
Allen, W. E. D. (Belfast, W.)
Atkinson, C.


Allen, Sir J. Sandeman (Liverp'l., W.)
Astor, Viscountess
Balfour, George (Hampstead)




Balfour, Captain H. H. (I. of Thanet)
Fremantle, Lieut.-Colonel Francis E.
Reid, David D. (County Down)


Betterton, Sir Henry B.
Galbraith, J. F. W.
Remer, John R.


Bevan, S. J. (Holborn)
Gault, Lieut.-Col. Andrew Hamilton
Reynolds, Col. Sir James


Bird, Ernest Roy
Graham, Fergus (Cumberland, N.)
Richardson, Sir P. W. (Sur'y, Ch'ts'y)


Bourne, Captain Robert Croft
Grattan-Doyle, Sir N.
Ross, Major Ronald D.


Bowater, Col. Sir T. Vansittart
Greaves-Lord, Sir Walter
Ruggles-Brise, Lieut.-Colonel E. A.


Brass, Captain Sir William
Greene, W. P. Crawford
Russell, Alexander West (Tynemouth)


Briscoe, Richard George
Grenfell, Edward C. (City of London)
Salmon, Major I.


Brown, Col. D. C. (N'th'l'd., Hexham)
Hacking, Rt. Hon. Douglas H.
Samuel, A. M. (Surrey, Farnham)


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Hall, Lieut.-Col. Sir F. (Dulwich)
Sandeman, Sir N. Stewart


Buchan, John
Harvey, Major S. E. (Devon, Totnes)
Sassoon, Rt. Hon. Sir Philip A. G. D.


Bullock, Captain Malcolm
Haslam, Henry C.
Savery, S. S.


Butler, R. A.
Henderson, Capt. R. R. (Oxl'd, Henley)
Smith, Louis W. (Sheffield, Hallam)


Cadogan, Major Hon. Edward
Heneage, Lieut.-Colonel Arthur P.
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Cayzer, Sir C. (Chester, City)
Hennessy, Major Sir G. R. J.
Smith-Carington, Neville W.


Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Herbert, Sir Dennis (Hertford)
Smithers, Waldron


Chadwick, Capt. Sir Robert Burton
Hills, Major Rt. Hon. John Waller
Somerville, D. G. (Willesden, East)


Christie, J. A.
Iveagn, Countess of
Steel-Maitland, Rt. Hon. Sir Arthur


Colfox, Major William Philip
Jones, Sir G. W. H. (Stoke New'gton)
Stuart, Hon. J. (Moray and Nairn)


Colville, Major D. J.
Kindersley, Major G. M.
Thomas, Major L. B. (King's Norton)


Courthope, Colonel Sir G. L.
King, Commodore Rt. Hon. Henry D.
Titchfield, Major the Marquess of


Cranborne, Viscount
Lamb, Sir J. Q.
Train, J.


Crichton-Stuart, Lord C.
Law, Sir Alfred (Derby, High Peak)
Tryon, Rt. Hon. George Clement


Croft, Brigadier-General Sir H.
Leigh, Sir John (Clapham)
Turton, Robert Hugh


Croom-Johnson, R. P.
Leighton, Major B. E. P.
Vaughan-Morgan, Sir Kenyon


Culverwell, C. T. (Bristol, West)
Lewis, Oswald (Colchester)
Wallace, Capt. D. E. (Hornsey)


Dalkeith, Earl of
Long, Major Eric
Ward, Lieut.-Col. Sir A. Lambert


Davies, Dr. Vernon
Lymington, Viscount
Warrender, Sir Victor


Davies, Maj. Geo. F. (Somerset, Yeovil)
McConnell, Sir Joseph
Waterhouse, Captain Charles


Dixon, Captain Rt. Hon. Herbert
Macdonald, Capt. P. D. (I. of W.)
Wayland, Sir William A.


Dugdale, Capt. T. L.
Maitland, A. (Kent, Faversham)
Wells, Sydney R.


Eden, Captain Anthony
Margesson, Captain H. D.
Wilson, G. H. A. (Cambridge U.)


Edmondson, Major A. J.
Merriman, Sir F. Boyd
Wolmer, Rt. Hon. Viscount


Elliot, Major Walter E.
Monsell, Eyres, Com. Rt. Hon. Sir B.
Womersley, W. J.


Erskine, Lord (Somerset, Weston-s-M.)
Morrison, W. S. (Glos., Cirencester)
Worthington-Evans, Rt. Hon. Sir L.


Falle, Sir Bertram G.
Ormsby-Gore, Rt. Hon. William
Young, Rt. Hon. Sir Hilton


Ferguson, Sir John
Percy, Lord Eustace (Hastings)



Fielden, E. B.
Peto, Sir Basil E. (Devon, Barnstaple)
TELLERS FOR THE NOES.—


Ford, Sir P. J.
Pownall, Sir Assheton
Captain Sir George Bowyer and


Forestier-Walker, Sir L.
Ramsbotham, H.
Sir George Penny.

Mr. PETHICK-LAWRENCE: I beg to move, in page 27, line 24, after the word "indirectly," to insert the words
and whether by one or more transactions.
The object of this Amendment is to include the case where the life tenant and the remainderman both concur with the transfer, but do not do it by a single transaction. The transactions of the life tenant and the remainderman are not absolutely simultaneous in one document, and it is necessary to insert there words to ensure that the case in which those two transactions are done separately should enter into the purview of the Clause.

Sir B. PETO: I am not altogether satisfied with the reason that the hon. Gentleman has given for the insertion of these words. He gave us no explanation, except one case which he said these words were intended to meet. That is not the situation with which we find ourselves confronted in the words of the Clause as now amended. We have just taken a decision on the question of whether the words "directly or indirectly" are necessary. There has been
a division of opinion upon that. We then proceed to an Amendment which proposes to insert the words
and whether by one or more transactions.
Those are almost exactly the same words in another form. We then have the words "to or for," which indicate a direct or indirect transaction, and we have here again a further instance of making assurance doubly sure. I do really think the Chancellor of the Exchequer is a little stretching the limit when he asks the Committee to accept phrase after phrase really operating in the same direction, practically to do the same thing—variations of the same words in different phrases, and really making assurance, so far as the Treasury is concerned, trebly sure. That may be very sound doctrine from the Treasury point of view, but what we have to consider is whether or not, taking the generality of cases, we are overloading this Clause with phrases. I think we have to ask for a more definite explanation of why it is necessary, after the Attorney-General has insisted on the words "directly or indirectly," which he tells us are commonly used in taxing Acts in order to prevent the evasion of the purpose
of the Act by some indirect transaction, and then to say immediately after "whether by one or more transactions." Obviously if you do a thing indirectly, you do it by more than one transaction. These two phrases are so nearly identical that we want a much better explanation than we have had from the Financial Secretary before the Committee agrees to insert the Amendment.

Sir HENRY BETTERTON: I am sorry to see the learned Attorney-General has not come back on to the bench. I would like to ask from the Financial Secretary an assurance that the case of successive transfers of life interest A to B, B to C and C to D which would be transfers by more than one transaction, are not the sort of case that it is the object of this Clause to cover. I want an assurance that in the opinion of the Attorney-General, we may safely accept the view he takes as the true construction in law. On the face of it I am bound to say it sounds a very vague and ambiguous phrase.

Mr. PETHICK-LAWRENCE: The answer to the hon. Member for Barnstaple (Sir Basil Peto) is that the effect of the two phrases is quite different. The effect of "directly or indirectly" is to deal with a case of transfer by a man to a company by way of an intermediary. The case of this Amendment is where the life tenant by one transaction and his remainderman by another produce a result which comes within the ambit of the Clause. I do not personally see the difficulty anticipated by the hon. Member for Rushcliffe (Sir H. Betterton); the meaning which is shortly conveyed by this Clause is the one to which I have referred. I do not anticipate any difficulties on the lines he suggests, but I am quite willing to consult my right hon. and learned Friend the Attorney-General in regard to the danger which the right hon. Member I think quite unnecessarily foresees.

Mr. SMITHERS: Is it not rather unfair? The people who are supposed to be before the Committee at the moment are the tenants for life and one or more remainders. The Financial Secretary presumes that there is collusion between these two for the purpose of tax dodging. I would ask him to suppose that the
tenant for life, for some reason or other, is in financial difficulties and has to pass over his interest to some company, and then quite a long time afterwards the next in succession for some perfectly good reason, also has to part with his reversion. Those are two perfectly genuine instances, neither of them wishing to evade or to have any collusion. Does the Financial Secretary mean that there shall be no time limit between these two transactions, between these two transfers of reversionary rights to a private company? It seems to me that here again is another instance of where the Government is trying to stop tax dodging, in which we all agree, but by providing measures to cover that particular case it is going to hurt transactions which will be quite innocent, which the Government itself never intended to hit.

Mr. REID: Might I ask the Financial Secretary what all this means? Let us take the case I want to put, and that my hon. Friend behind me has put. There are societies—as the Financial Secretary must know, unless he lives with his head in a bag—like the Law Reversion Society, which deals with principals. I hope the Financial Secretary has real knowledge of his own without having to send for his Treasury experts. There are societies who deal with life interest and reversionary interests on actuarial principles. There are quite a number of very well-known and highly respected societies dealing with these life interests. [An HON. MEMBER: "Insurance companies!"] Yes, but there are other companies who deal with them on the same principles as those on which insurance companies deal with insurance.
Suppose that a man is a tenant for life and he wants to raise some money. He goes to a particular company, whether an insurance company or a reversionary company, and he applies to them for sale of his life interest in the property. They estimate on their tables what the rate of interest should be, and make him an offer. He accepts the offer. At some future time, it may be next week, or months or years afterwards, a remainder, knowing nothing about the transaction with the life interest, goes to a company and it happens to be the same company, and offers that company his reversionary interest. The company looks at its tables, considers
the matter and makes him an offer on an actuarial basis for a reversionary interest. There are two transactions—"one or more" transactions. The company has made two perfectly genuine, separate, independent transactions. It is now going to run the risk of being saddled with Duty because it has made two transactions with two different people on the same estate on an entirely different basis. Why should anybody be saddled with Duty?

Mr. PETHICK-LAWRENCE: I do not think the hon. and learned Member can have read one of the later Clauses, a Sub-section of which provides that where the property is subject to a bona fide sale for cash, the transaction is outside the Clause. If I understand the case of my hon. and learned Friend, those are cases of bona fide sales for cash. There is no doubt whatever that those are outside the Clause by reason of the words further on which we have not yet dealt with.

Mr. ATKINSON: I am not sure that the Financial Secretary appreciates one or two points that have been put. Ought there not to be some identity between the various branches of this transaction. Supposing the life tenant signs one year and three or four years afterwards the reversioner signs. You say "whether by one or more transactions." That is what I object to. I agree that if one signs

to-day and the other signs to-morrow, that that is all part of the same bargain and that that ought to come within the provision. That would be covered by the words that we have already got; but when you introduce the words "whether by one or more transactions" you are destroying the identity and, therefore, the continuity of the transaction and permitting a totally different transaction to be treated as one with the former transaction. It is not the transfer of the life estate which makes the duty payable, but the transfer of the reversion which makes the duty payable. The life tenant may have made a transfer one year without any knowledge of an intended transfer by the remainder, and then because in a totally separate transaction, of which he knew nothing, the reversioner sells to the same purchaser his reversion, lo and behold, the personal transaction by the tenant for life becomes one which is hit by this Bill. It is essential to have something which connects the two transactions and makes them really one, although carried out at two separate dates. I object to the proposed words, and I do not think that they are necessary to do what the Financial Secretary wants.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 270; Noes, 135.

Division No. 404.]
AYES.
[9.44 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Burgess, F. G.
Freeman, Peter


Adamson, W. M. (Staff., Cannock)
Burgin, Dr. E. L.
Gardner, B. W. (West Ham, Upton)


Addison, Rt. Hon. Dr. Christopher
Buxton, C. R. (Yorks. W. R. Elland)
Gardner, J. P. (Hammersmith, N.)


Aitchison, Rt. Hon, Craigie M.
Caine, Derwent Hall-
George, Megan Lloyd (Anglesea)


Alexander, Rt. Hon. A. V. (Hillsbro')
Cameron, A. G.
Gibbins, Joseph


Alpass, J. H.
Cape, Thomas
Gibson, H. M. (Lancs, Mossley)


Ammon, Charles George
Charleton, H. C.
Gill, T. H.


Arnott, John
Chater, Daniel
Gillett, George M.


Aske, Sir Robert
Clarke, J. S.
Glassey, A. E.


Attlee, Clement Richard
Cluse, W. S.
Gossling, A. G.


Ayles, Walter
Clynes, Rt. Hon. John R.
Gould, F.


Baker, John (Wolverhampton, Bilston)
Cocks, Frederick Seymour
Graham, D. M. (Lanark, Hamilton)


Baldwin, Oliver (Dudley)
Compton, Joseph
Graham, Rt. Hon. Wm. (Edin., Cent.)


Barnes, Alfred John
Cove, William G.
Granville, E.


Barr, James
Cowan, D. M.
Gray, Milner


Bellamy, Albert
Daggar, George
Grenfell, D. R. (Glamorgan)


Benn, Rt. Hon. Wedgwood
Dallas, George
Griffiths, T. (Monmouth, Pontypool)


Bennett, Capt. Sir E. N. (Cardiff C.)
Dalton, Hugh
Groves, Thomas E.


Bennett, William (Battersea, South)
Davies, E. C. (Montgomery)
Grundy, Thomas W.


Benson, G.
Day, Harry
Hall, F. (York, W. R., Normanton)


Bentham, Dr. Ethel
Dickson, T.
Hall, G. H. (Merthyr Tydvil)


Birkett, W. Norman
Dukes, C.
Hall, Capt. W. P. (Portsmouth, C.)


Bondfield, Rt. Hon. Margaret
Duncan, Charles
Hamilton, Mary Agnes (Blackburn)


Bowen, J. W.
Ede, James Chuter
Hardie, George D.


Bowerman, Rt. Hon. Charles W.
Edmunds, J. E.
Harris, Percy A.


Brooke, W.
Edwards, E. (Morpeth)
Hartshorn, Rt. Hon. Vernon


Brothers, M.
Egan, W. H.
Hastings, Dr. Somerville


Brown, C. W. E. (Notts. Mansfield)
Elmley, Viscount
Haycock, A. W.


Brown, Ernest (Leith)
England, Colonel A.
Hayes, John Henry


Brown, Rt. Hon. J. (South Ayrshire)
Evans, Capt. Ernest (Welsh Univer.)
Henderson, Arthur, Junr. (Cardiff, S.)


Buchanan, G.
Foot, Isaac
Henderson, Thomas (Glasgow)


Henderson, W. W. (Middx., Enfield)
Mansfield, W.
Sherwood, G. H.


Herriotts, J.
March, S.
Shield, George William


Hirst, G. H. (York W. R. Wentworth)
Marcus, M.
Shiels, Dr. Drummond


Hirst, W. (Bradford, South)
Markham, S. F.
Shillaker, J. F.


Hoffman, P. C.
Marley, J.
Shinwell, E.


Hollins, A.
Marshall, Fred
Short, Alfred (Wednesbury)


Hore-Belisha, Leslie
Mathers, George
Simmons, C. J.


Horrabin, J. F.
Maxton, James
Sinkinson, George


Hudson, James H. (Huddersfield)
Messer, Fred
Sitch, Charles H.


Hunter, Dr. Joseph
Middleton, G.
Smith, Ben (Bermondsey, Rotherhithe)


Hutchison, Maj.-Gen. Sir R.
Millar, J. D.
Smith, Frank (Nuneaton)


Isaacs, George
Milner, Major J.
Smith, H. B. Lees- (Keighley)


Jenkins, W. (Glamorgan, Neath)
Morgan, Dr. H. B.
Smith, Rennie (Penistone)


John, William (Rhondda, West)
Morley, Ralph
Smith, Tom (Pontefract)


Johnston, Thomas
Morris, Rhys Hopkins
Smith, W. R. (Norwich)


Jones, F. Llewellyn- (Flint)
Morrison, Herbert (Hackney, South)
Snell, Harry


Jones, Henry Haydn (Merioneth)
Morrison, Robert C. (Tottenham, N.)
Snowden, Rt. Hon. Philip


Jones, J. J. (West Ham, Silvertown)
Mort, D. L.
Sorensen, R.


Jones, Rt. Hon. Leif (Camborne)
Moses, J. J. H.
Stamford, Thomas W.


Jones, Morgan (Caerphilly)
Mosley, Sir Oswald (Smethwick)
Stephen, Campbell


Jowett, Rt. Hon. F. W.
Muff, G.
Stewart, J. (St. Rollox)


Jowitt, Rt. Hon. Sir W. A.
Muggeridge, H. T.
Sullivan, J.


Kelly, W. T.
Murnin, Hugh
Sutton, J. E.


Kennedy, Thomas
Nathan, Major H. L.
Taylor, R. A. (Lincoln)


Kenworthy, Lt.-Com. Hon. Joseph M.
Naylor, T. E.
Thurtle, Ernest


Kinley, J.
Newman, Sir R. H. S. D. L. (Exeter)
Tinker, John Joseph


Kirkwood, D.
Noel Baker, P. J.
Tout, W. J.


Lang, Gordon
Oliver, P. M. (Man., Blackley)
Townend, A. E.


Lathan, G.
Owen, Major G. (Carnarvon)
Trevelyan, Rt. Hon. Sir Charles


Law, Albert (Bolton)
Palin, John Henry
Vaughan, D. J.


Law, A. (Rosendale)
Paling, Wilfrid
Viant, S. P.


Lawrence, Susan
Palmer, E. T.
Walkden, A. G.


Lawrie, Hugh Hartley (Stalybridge)
Perry, S. F.
Walker, J.


Lawson, John James
Pethick-Lawrence, F. W.
Wallace, H. W.


Lawther, W. (Barnard Castle)
Phillips, Dr. Marion
Wallhead, Richard C.


Leach, W.
Pole, Major D. G.
Walters, Rt. Hon. Sir J. Tudor


Lee, Frank (Derby, N. E.)
Potts, John S.
Watkins, F. C.


Lee, Jennie (Lanark, Northern)
Price, M. P.
Watson, W. M. (Dunfermline).


Lees, J.
Quibell, D. J. K.
Watts-Morgan, Lt.-Col. D. (Rhondda)


Lewis, T. (Southampton)
Ramsay, T. B. Wilson
Wedgwood, Rt. Hon. Josiah


Lloyd, C. Ellis
Raynes, W. R.
Wellock, Wilfred


Logan, David Gilbert
Richards, R.
Welsh, James (Paisley)


Longbottom, A. W.
Richardson, R. (Houghton-le-Spring)
Welsh, James C. (Coatbridge)


Longden, F.
Riley, Ben (Dewsbury)
Westwood, Joseph


Lowth, Thomas
Ritson, J.
White, H. G.


Lunn, William
Roberts, Rt. Hon. F. O. (W. Bromwich)
Whiteley, Wilfrid (Birm., Ladywood)


Macdonald, Gordon (Ince)
Romeril, H. G.
Whiteley, William (Blaydon)


MacDonald, Rt. Hon. J. R. (Seaham)
Rosbotham, D. S. T.
Williams, David (Swansea, East)


MacDonald, Malcolm (Bassetlaw)
Rowson, Guy
Williams, Dr. J. H. (Llanelly)


Macdonald, Sir M. (Inverness)
Russell, Richard John (Eddisbury)
Wilson, C. H. (Sheffield, Attercliffe)


McElwee, A.
Salter, Dr. Alfred
Wilson, J. (Oldham)


McEntee, V. L.
Samuel, Rt. Hon. Sir H. (Darwen)
Wilson, R. J. (Jarrow)


McGovern, J. (Glasgow, Shettleston)
Sanders, W. S.
Winterton, G. E. (Leicester, Loughb'gh)


McKinlay, A.
Sandham, E.
Wise, E. F.


MacLaren, Andrew
Sawyer, G. F.
Wood, Major McKenzie (Banff)


Maclean, Sir Donald (Cornwall, N.)
Scrymgeour, E.
Wright, W. (Rutherglen)


Maclean, Neil (Glasgow, Govan)
Scurr, John
Young, R. S. (Islington, North)


McShane, John James
Sexton, James



Malone, C. L'Estrange (N'thampton)
Shaw, Rt. Hon. Thomas (Preston)
TELLERS FOR THE AYES.—


Mander, Geoffrey le M.
Shepherd, Arthur Lewis
Mr. Allen Parkinson and Mr. Charles Edwards.


NOES.


Acland-Troyte, Lieut.-Colonel
Cadogan, Major Hon. Edward
Eden, Captain Anthony


Ainsworth, Lieut.-Col. Charles
Cayzer, Sir C. (Chester, City)
Edmondson, Major A. J.


Allen, Sir J. Sandeman (Liverp'l., W.)
Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Elliot, Major Walter E.


Allen, W. E. D. (Belfast, W.)
Chadwick, Capt. Sir Robert Burton
Erskine, Lord (Somerset, Weston-s.-M.)


Astor, Viscountess
Christie, J. A.
Everard, W. Lindsay


Atholl, Duchess of
Colfox, Major William Philip
Falle, Sir Bertram G.


Atkinson, C.
Colman, N. C. D.
Ferguson, Sir John


Balfour, George (Hampstead)
Colville, Major D. J.
Fielden, E. B.


Balfour, Captain H. H. (I. of Thanet)
Courthope, Colonel Sir G. L.
Ford, Sir P. J.


Betterton, Sir Henry B.
Cranborne, Viscount
Forestier-Walker, Sir L.


Bevan, S. J. (Holborn)
Crichton-Stuart, Lord C.
Fremantle, Lieut.-Colonel Francis E.


Bird, Ernest Roy
Croft, Brigadier-General Sir H.
Ganzoni, Sir John


Bourne, Captain Robert Croft
Croom-Johnson, R. P.
Gault, Lieut.-Col. Andrew Hamilton


Bowater, Col. Sir T. Vansittart
Culverwell, C. T. (Bristol, West)
Graham, Fergus (Cumberland, N.)


Bowyer, Captain Sir George E. W.
Cunliffe-Lister, Rt. Hon. Sir Philip
Grattan-Doyle, Sir N.


Briscoe, Richard George
Dalkeith, Earl of
Greaves-Lord, Sir Walter


Brown, Col. D. C. (N'th'l'd., Hexham)
Davies, Dr. Vernon
Greene, W. P. Crawford


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Davies, Maj. Geo. F. (Somerset, Yeovil)
Grenfell, Edward C. (City of London)


Buchan, John
Dixon, Captain Rt. Hon. Herbert
Hacking, Rt. Hon. Douglas H.


Bullock, Captain Malcolm
Duckworth, G. A. V.
Hall, Lieut.-Col. Sir F. (Dulwich)


Butler, R. A.
Dugdale, Capt. T. L.
Harvey, Major S. E. (Devon, Totnes)




Haslam, Henry C.
O'Connor, T. J.
Smithers, Waldron


Henderson, Capt. R. R. (Oxf'd, Henley)
O'Neill, Sir H.
Somerville, D. G. (Willesden, East)


Heneage, Lieut.-Colonel Arthur P.
Ormsby-Gore, Rt. Hon. William
Stanley, Lord (Fylde)


Nennessy, Major Sir G. R. J.
Peake, Captain Osbert
Steel-Maitland, Rt. Hon. Sir Arthur


Herbert, Sir Dennis (Hertford)
Percy, Lord Eustace (Hastings)
Stewart, W. J. (Belfast South)


Hills, Major. Rt. Hon. John Waller
Peto, Sir Basil E. (Devon, Barnstaple)
Stuart, Hon. J. (Moray and Nairn)


Iveagh, Countess of
Pownall, Sir Assheton
Thomas, Major L. B. (King's Norton)


Jones, Sir G. W. H. (Stoke New'gton)
Ramsbotham, H.
Train, J.


Kindersley, Major G. M.
Rawson, Sir Cooper
Tryon, Rt. Hon. George Clement


Lamb, Sir J. Q.
Reid, David D. (County Down)
Turton, Robert Hugh


Lane Fox, Col. Rt. Hon. George R.
Remer, John R.
Vaughan-Morgan, Sir Kenyon


Law, Sir Alfred (Derby, High Peak)
Reynolds, Col. Sir James
Wallace, Capt. D. E. (Hornsey)


Leigh, Sir John (Clapham)
Richardson, Sir P. W. (Sur'y, Ch't'sy)
Ward, Lieut.-Col. Sir A. Lambert


Leighton, Major B. E. P.
Roberts, Sir Samuel (Ecclesall)
Warrender, Sir Victor


Lewis, Oswald (Colchester)
Ross, Major Ronald D.
Waterhouse, Captain Charles


Long, Major Eric
Ruggles-Brise, Lieut.-Colonel E. A.
Wayland, Sir William A.


Lymington, Viscount
Russell, Alexander West (Tynemouth)
Wells, Sydney R.


McConnell, Sir Joseph
Salmon, Major I.
Wilson, G. H. A. (Cambridge U.)


Macdonald, Capt. P. D. (I. of W.)
Samuel, A. M. (Surrey, Farnham)
Wolmer, Rt. Hon. Viscount


Maitland, A. (Kent, Faversham)
Sandeman, Sir N. Stewart
Womersley, W. J.


Makins, Brigadier-General E.
Sassoon, Rt. Hon. Sir Philip A. G. D.
Worthington-Evans, Rt. Hon. Sir L.


Margesson, Captain H. D.
Savery, S. S.
Young, Rt. Hon. Sir Hilton


Merriman, Sir F. Boyd
Smith, Louis W. (Sheffield, Hallam)



Monsell, Eyres, Com. Rt. Hon. Sir B.
Smith, R. W. (Aberd'n & Kinc'dine, C.)
TELLERS FOR THE NOES.—


Morrison, W. S. (Glos., Cirencester)
Smith-Carington, Neville W.
Sir George Penny and Major the Marquess of Titchfield.

Mr. PETHICK-LAWRENCE: I beg to move, in page 27, line 25, to leave out the words "any private company," and to insert instead thereof the words:
a company to which this Part of this Act applies.

Sir D. HERBERT: Can the Financial Secretary tell us what is a company "to which this Part of this Act Applies"; and also whether he is going to stick to the definition in Clause 33, or whether there is to be any other definition of a company "to which this Part of this Act applies"?

Mr. PETHICK-LAWRENCE: As at present advised, we intend to adhere to the definition in Clause 33.

Amendment agreed to.

The ATTORNEY-GENERAL: I beg to move, in page 27, line 26, to leave out paragraph (a), and to insert instead thereof the words:
(a) the share of the consideration payable to the deceased in respect of the transfer was satisfied otherwise than by an allotment of shares in the company or the grant to him by the company of an annuity or the right to some other periodical payment.
The reasons which led the Chancellor of the Exchequer to make this alteration are very much the same as those which led him to make a similar alteration on Clause 29. In the Clause as drafted the words "full consideration" occur, and it was thought that possibly the phrase might lead to some difficulty in that it might be said that the "consideration" was not full. The Committee will observe that in the new Clause we are proposing to treat debentures in a company
as being equivalent to cash. An explanation of this Clause involves an understanding of the whole principle on which it is based. On the death of a life tenant in the ordinary case Death Duty is to be paid, not on the value of the life interest, but on the value of the property in which the life interest subsists. If a life tenant sells or disposes of his interest to an outsider, notwithstanding the fact that he has completely disposed of his interest for cash, on his death the property under the existing law is deemed to pass and duty will be payable in respect of the property. Where a life tenant disposes of his interest to the remainder, where a small estate merges into a larger estate, and the estate of the life tenant comes to an end, the property is not deemed to pass. That was the situation struck at 30 years ago by the Finance Act, 1900, which provided under exactly what circumstances a life tenant might dispose of his property to the remainder so as to avoid the duty.
I am not now concerned as to the justice of the law, but I am concerned to establish the proposition, which no one will dispute, that whatever the law may be it is not right that any person should be able to escape from the existing law by a mere subterfuge. The existing law is that if a life tenant disposes of his interest to a remainder and three years pass Estate Duty is not payable; but however many years may pass, three years or 30 years, if the life tenant retains any interest whatever in the property in which he had a life interest, then, notwithstanding the passage of years, the property is deemed to pass.
The life tenant may dispose of his estate to the remainder, but preserve to himself the right to live in the dower house or the mansion house, and however small and inconsiderable that may be if he does, no matter how many years have passed, on the death of the life tenant the law of 1900, as amended by the Act of 1910, says that the whole property will be deemed to pass. That has been the existing law, subject to a slight alteration in 1910, for the last 30 years, and there have been very obvious attempts at evasion which I and my predecessors have had to consider.
Let me give the Committee an actual illustration, in the same way as I did on Clause 29, omitting the names. This is an actual illustration which my predecessors had to consider and in which they regretfully came to the conclusion that they could do nothing. A company was formed with a capital of £300,000, of which £190,003 was issued, and the shareholdings were as follows. The life tenant held one share and the remainder man 190,000, and the two odd shares were held by the two other people necessary to constitute the company. The consideration for the sale was this. The company agreed to pay the life tenant an annuity of £7,000 and to rent him the mansion house at a rent of £1,350 per annum, the landlord, that is to say the company, paying the rates and doing the repairs. The substance of the transaction was that the former life tenant got exactly what he was getting when he was life tenant, but Estate Duty was payable on one share only. That obviously is the class of case which we have to meet—I think no one can doubt that—and we propose to do it in the way proposed in the Amendment. I trouble the Committee with the analogy of the 1900 Act in order that they may see at what we are driving.
We are trying to reproduce the old principle of the 1900 Act that the life tenant must really cease to have an interest in the property if he is selling or disposing of the property. If his share of the consideration is satisfied otherwise than by shares in the company, or the grant of an annuity, or the right to some other periodical payment he does not come out by virtue of paragraph (a). He may still come out by virtue of paragraph (b) because there is the disjunctive
"or" between these paragraphs but we regard the man who receives shares in the company as being a man who has not ceased to have any interest in the property, just as in the old days if he retained any interest, then the property would be deemed to pass, no matter how small that interest was. We think it right that the same principle should apply here, although when we come to deal with the property passing we prevent double taxation by taking off the value of the property, the value of the shares. I think that this Amendment will go some way to meet the wishes of hon. and right hon. Gentlemen opposite who, I know, were worried about the phrase "full consideration." I think we have also met to some extent reasonable wishes expressed by treating debentures as though they were cash, and not precluding the person holding the life interest from taking debentures in the company and at the same time getting the benefit of paragraph (a).

Sir L. WORTHINGTON-EVANS: What do you mean by periodical payments?

The ATTORNEY-GENERAL: The sort of thing that we have in mind is something like an annuity, but dependent upon some event other than the actual life of the recipient.

Sir L. WORTHINGTON-EVANS: Do you mean payment by instalments?

The ATTORNEY-GENERAL: Oh, no. As long as it is cash, even if the cash is payable by instalments, he gets the privilege of the paragraph (a), but, if it is something in the nature of an annuity, that would not come within paragraph (a).

Question, "That the words proposed to be left out stand part of the Clause," put, and negatived.

Question proposed, "That those words be there inserted."

Mr. ATKINSON: The Attorney-General, in explaining the Amendment, referred to what, I think, he described as a similar provision in Clause 29, but if I read that provision aright, this proposal is precisely the opposite to the first exempted transaction under Clause 29. There, if it was a bona fide sale where the consideration for the sale was received or receivable wholly by the deceased
for his own use and was satisfied in one of the following manners, that is either by a capital sum of a fixed amount or by shares in or debentures of the company, that is an exempted transaction. The proposal here is precisely the opposite. If the consideration is satisfied by an allotment of shares, it does not come within this exemption. As regards the grant of an annuity, to that extent, I think this proposal is common with the other, but then we come to "the right to some other periodical payment" and in that respect this proposal is directly contrary to the corresponding proposal in Clause 29 because those words surely would cover a sale for cash payable by instalments. Such a sale is surely not protected by this Amendment. The only point I am making is that it is very inconsistent to have one description in Clause 29 (2, a) and a totally different description of protected transaction here. Why, in the first case where the consideration is the allotment of shares it is a protected transaction and why in this case it is not, I do not know. Why payment by instalments is protected in the first case but not in this case, I do not appreciate; but I submit that there should be some conformity between the two Clauses in this respect.

Mr. TURTON: I ask the Attorney-General to reconsider these words, "periodical payment." They occur in the Apportionment Act, 1870, and in that Act they were duly considered and explained in the High Court by Lord Chancellor Selborne, who held that "periodical payment" must be a payment which was purely periodical, that is to say, made at fixed times on some antecedent obligation, and not made at variable times on the discretion of individuals. Applying that definition, it embraces the example which the Attorney-General himself negatived, that of a certain sum down and other moneys by instalments for a certain period of years. There is some doubt in my mind as to whether payment by instalments would not receive the benefit of Sub-section (2, b), but I do not think it would affect the particular illustration which I shall give the Committee. "A" is a tenant for life and "B" the remainder man. "A" disposes of his interest and "B" disposes of his. The terms made by
"A" for the transfer of the property to "C"—the company—are that he shall have £20,000 down and £5,000 a year for five years. After three years, "A" dies. He has not received the full capital sum under the terms agreed upon and there will be a debt due to his estate of £5,000 a year for two years. That debt will not be covered by Sub-section (2, b). I think that is a point of some substance, and I hope that these words, "periodical payment," will be altered. If I might suggest words which would more nearly fit my own opinion on the matter, it would be some such words as "contingent payment." I mention the point chiefly because I was so interested in the original Clause that I put in an Amendment, which is now out of order, to add the words "or agreed to be paid."

The ATTORNEY-GENERAL: I am indebted to the hon. Member for Thirsk (Mr. Turton), both for his researches into the earlier law on the subject and for the suggestion which he has made of the possible substitution of "contingent" for "periodical." In expressing my thanks to him, may I say that I will look into the matter between now and the Report stage? My intention clearly is not to deprive a man of the benefit of paragraph (a) merely by reason of the purchase price being paid by instalments.

Sir L. WORTHINGTON-EVANS: Will not the Attorney-General accept the word "contingent" now, and on Report stage, if necessary, put in some other word? As long as he gives us a definite understanding that this word will not appear after the Report stage, I am satisfied.

The ATTORNEY-GENERAL: I would rather not say more than I have said, because I have not had the opportunity of discussing this with those who know more about it than I do, but the intention is to use appropriate words to cover the case of the payment of the purchase price by instalments.

Amendment agreed to.

Further Amendment made: In page 27, line 35, leave out the word "person."—[Mr. P. Snowden.]

Captain BOURNE: I beg to move, in page 27, line 38, after the word "enjoyment," to insert the words:
other than as a lessee in the case of land.
I move this Amendment in order to ascertain whether the words:
possession or enjoyment of any part thereof … whether by contract or otherwise
would not include the case where the tenant for life has transferred the whole of his interest to a company and taken his payment in shares or otherwise by a lump sum, but has in point of fact a contract with that company by which he is lessee of the mansion house and park. I am certain that it is not the intention of the Chancellor of the Exchequer to penalise a company in such a case where the lease is genuine. The point was met on Clause 29, but I am not certain whether the words:
enjoyment of any part thereof … whether by contract or otherwise
would not, in fact, cover the case where the tenant for life has taken a lease and is paying full rent for the lease which he has taken. I want that point cleared up.

Mr. P. SNOWDEN: I am in sympathy with the object that the hon. Member has in view in moving this Amendment, but I cannot accept it in the form in which it stands. I promise, however, to give sympathethic consideration to it, and to see what words are suitable.

Captain BOURNE: With that understanding, I beg to ask leave to withdraw the Amendment. I am very much obliged to the right hon. Gentleman, and I am sure that he can find better words than I can, which I shall be glad to accept on the Report stage.

Amendment, by leave, withdrawn.

Mr. P. SNOWDEN: I beg to move, in page 27, line 44, at the end, to insert the words:
otherwise than in respect or on account of debentures or loans or purchase money being a capital sum of a fixed amount.
Paragraph (b) provides that if after the transfer the deceased releases his interest in the company, and takes no benefit therefrom and survives three years after the release, the Clause does not operate on his death. It is, however, necessary to limit the provision that he must take no benefit from the company, for clearly he should be allowed to take any cash or debentures to which he is entitled. The words of the Amendment accordingly provide for this.

Sir L. WORTHINGTON-EVANS: Does this include shares which are allotted to a vendor in lieu of cash? It applies to cash, and to debentures given instead of cash; does it apply to shares of the company, and if it does not, will the right hon. Gentleman say why?

The ATTORNEY-GENERAL: The essential difference between a shareholder and a debenture holder is that the shareholder can be treated and regarded as one of the incorporators. The debenture holder is a mere creditor, and following out the 1900 Act principle, we must see that there really is a genuine settlement of interest.

Sir L. WORTHINGTON-EVANS: That may be so, but I do not see why there should be any difference because the shareholder is one of the incorporators. The point is that he has given up the property and in consideration for the property he may take cash or debentures. I do not see why he should not take shares. What does it matter? He has given up the property. The company has got the property, and all he has got is shares in lieu of cash. What difference is there between a preference share with a fixed rate of interest, and a debenture? There is none from this point of view, for the owner is severed from his property, and it might well be that it is advisable, in the interests of the company, that it should not pledge all its assets to the debenture holders, but should be able later on, in development of the estate, to be able to borrow money. If the company has already done so, has pledged those assets to the transferor, it cannot do it a second time, whereas if the transferor has taken shares the Bank can be a secured creditor ahead of the shares, and that may be highly desirable. We have to consider this not merely from the point of view of evasion. I am looking at it from the business point of view. If such a company desires to raise money at a hank or on debentures, and it is clogged up with a lot of prior loans from the previous owner, it cannot possibly develop the estate which, in the public interest, it not only ought to be enabled to do but encouraged to do. The Chancellor of the Exchequer is making the words too narrow. If the right hon. Gentleman says he will consider the point I am ready to leave it. There is no party
point in this, it is merely a business point. We want to see that these companies are not tied up so that they cannot even borrow money from their bankers.

Captain BOURNE: I would ask the right hon. Gentleman to consider the words in the new paragraph (a) which the Chancellor has introduced:
(a) "the share of the consideration payable to the deceased in respect of the transfer was satisfied otherwise than by an allotment of shares in the company.
After all, the shares pass from the estate at death. He has got to pay death duties on the shares in any case. I cannot see how he can evade taxation. He is sufficiently caught in these Clauses. In such a case it is immaterial whether the company has to pay or the estate has to pay. The shares are of value, and there is no possibility of escaping death duty.

Mr. ATKINSON: I would like to repeat a point I put before and a question which was not answered. In Clause 29 the Government have coupled shares and debentures in the phrase
a capital sum of a fixed amount or by shares in or debentures of the company.
When dealing with the same point here the Government leave out "or by shares," and merely have it
debentures or purchase money being the capital sum of a fixed amount.
Surely there ought to be some consistency. If a sale for shares is permissible under Clause 29, why is it not permissible under Clause 30?

The ATTORNEY-GENERAL: I am sorry if I omitted to answer the question of the hon. and learned Member. I did my best to answer all the questions. I brought this upon myself by saying that in Clause 29, as in Clause 30, we had struck out the words "for full consideration." But this Clause and Clause 29 are wholly different. The point of this Clause is to reproduce the position enacted by the Act of 1900. The Act of 1900, in its wisdom, said that where there was a transfer from a life tenant to a remainderman the property should be deemed to pass on the life tenant's death unless the life tenant had completely divested himself of all interest in the estate. Attempts were made to get round that provision by means of this
subterfuge of a company, and we have to reproduce, so far as we can, the analogy of the 1900 Act. It seems quite plain that we cannot say that a life tenant has got rid of all his interest in the estate if he continues to hold, possibly, 99 per cent. of the company; and for that reason, and to make an analogue to the 1900 Act, we are making it plain that he must have got rid of all his interest, he must not hold shares, which are the equivalent of an interest in the property.

Viscount WOLMER: The Chancellor of the Exchequer has referred to the 1900 Act. We have to settle here whether or not we are doing the just and right thing for the benefit of the industries of this country. The industry which will be principally affected is agriculture, and that is why some of us feel so strongly about this matter. On what possible grounds can you defend this distinction? Under Clause 29 the man who transfers his business to a company is actually encouraged to take part of the purchase price in shares. Under the Clause we are discussing, where a man who has a life interest in an estate pools that interest with the remainderman, you forbid him to take shares. Consequently, you penalise the man who owns a landed estate for trying to put that estate on a business footing under the management of a company.
This is not the evasion of taxation, but it is merely a business proposition which ought to be encouraged by hon. Members opposite. To say that a man who transfers his interest in an estate to a company must not have a vestige of a connection with that company in the form of bolding shares is totally unreasonable, and shows that this is a special class of legislation designed to get at a particular section of the community whom hon. Members opposite believe to be tax-evaders. The situation is aggravated by the fact that if the owner of the life interest, the life tenant of an estate, transfers that interest to his son, I think I am correct in saying that if he does that more than three years before his death, it is a gift inter vivos, and the estate does not pay duty. In this case the three years' limit does not operate.

The ATTORNEY-GENERAL: It only applies under the existing law if the
life tenant ceases to have any whatever in the property.

Viscount WOLMER: In the ordinary case, if a man transfers his property to his son three years before his death, then the Death Duties do not apply.

The ATTORNEY-GENERAL: Not in that case, if that is all the interest he has got.

Viscount WOLMER: If that is the case with a man who has only a life interest in the property, what justification is there for treating a life interest on a different basis?

Captain BOURNE: I hope that the Chancellor of the Exchequer will not forget the 1900 Act. None of us desires to help in the evasion of Death Duties, but it seems to me that if a tenant for life takes a definite allotment of shares, and on his death those shares pass as part of his estate, they will be chargeable to Death Duties as part of his estate. I really think that the Chancellor of the Exchequer is obsessed with the 1900 Act, and he is using that for the retention of the small interest of the tenant for life to prevent evasion. In this case, it is something quite different. The payment is in a concrete form, it is taxable to Death Duties, and it seems to me that the 1900 Act hardly applies.

Sir D. HERBERT: I should like to call the attention of the Attorney-General to a point which I think is merely a drafting point. In this Amendment he is proposing to some extent to limit the word "payment," and I suggest that, after the word "payment," a further limitation is needed in order to relate these payments to what has come before. The point is raised in an Amendment which I have put down—in page 27, line 43, after the word "payment," to insert the words "in respect thereof." I would ask the Attorney-General to bear that point in mind.

Amendment agreed to.

Sir L. WORTHINGTON-EVANS: I beg to move, in page 28, to leave out from the word "manner," in line 2, to the end of line 4, and to insert instead thereof the words:
and to the same extent as it would have been deemed to pass if the transfer to or for the benefit of the private company had not been made.
The object of this Amendment is to ensure that the duty payable shall be the same duty as would have been payable if there had been no transfer for the benefit of a private company, that is to say, that the duty shall be payable in exactly the same way as if there had been no attempt to evade the duty at all, and as if the transaction of transfer to a private company had not taken place. I am not sure that some words of this sort are not necessary to prevent double taxation, but, at any rate, the measure of taxation—as I do not imagine that this is intended to be penal taxation—should be that which would have been payable if the transfer to a private company had not been made. The object is to prevent evasion of duty, not to make the duty a penal one—not to double the duty. This Amendment provides for the duty being chargeable in exactly the same way as if the transfer had not taken place.

The ATTORNEY-GENERAL: Our intention in this Clause is, as I have said, to bring about this situation, that, where in reality you have a transfer from the life tenant to the remainderman, notwithstanding that in form it is a transfer from the life tenant to a company, yet it shall be treated as if it were a transfer to the remainderman, with all the consequences that follow. It does not seem to me that the words which the right hon. Gentleman has selected would achieve that result. We should need some words like these:
and to the same extent as it would have been deemed to pass if, instead of the transfer being made to or for the benefit of a private company, the estate so transferred to a private company had been transferred to the remainderman.
Even then, I think the words would need a good deal of polishing, because all sorts of consequences would follow from them, but that is the object which we have in mind, and which we think we have attained. I am afraid I could not accept the words of this Amendment, because I think they would have a consequence very different from that which the right hon. Gentleman has foreseen. Our intention is not to exact penal taxation, double taxation, or different taxation from that which would have resulted had the property been transferred directly to the remainderman instead of to a company.

Amendment negatived.

Sir D. HERBERT: I beg to move, in page 28, to leave out the words from the word "time" in line 7, to the word "the" in line 8.
The words "for full consideration in money or money's worth" are not needed at all, and in any case, if they are to stand, there must be some alteration of some kind or other, because the Clause provides not only for a sale, but also for an exchange. An exchange, of course, is not an exchange for money or money's worth. Those are not really words that are applicable to an exchange, and this is a case where they may quite properly be left out. It will make no essential difference and it will make the Clause clearer.

Mr. P. SNOWDEN: The sole object of the insertion of the words is to ensure that the sale or exchange should be a bona fide transaction, and I see no reason for giving them up.

Sir D. HERBERT: The right hon. Gentleman says it is to ensure that it shall be bona fide, but he has that already. My point is that, if the sale or exchange has to be bona fide, you had much better leave it for it to be proved to be a bona fide sale or exchange than complicate the bona fides of the matter by saying it is to be for full consideration in money or money's worth, which might possibly have a somewhat narrower interpretation than the words "bona fide sale or exchange." I think there is something in the suggestion that the words should go out, certainly, if the words "bona fide" remain in, otherwise you get a certain possibility of a difference between the two. "Bona fide" and "for full consideration in money or money's worth" may not necessarily be exactly the same.

Sir B. PETO: May I ask the Chancellor to give a reply to my hon. Friend's last remark? What is the object of the duplication of practically identical phrases? Either these words mean something more than "bona fide," or they limit "bona fide." You cannot possibly want both, and I think the right hon. Gentleman should explain why it is necessary to have both. He did not make that clear in his explanation.

Mr. P. SNOWDEN: Hon. Members opposite admit that at the worst, or at
the best, this can only be a duplication of what is implied in "bona fide." [HON. MEMBERS: "NO!"] A sale might be a bona fide sale, but it might not be for full consideration of money or money's worth. Therefore, the insertion of both will cover a sale which might be a bona fide sale, but was not for full consideration of money or money's worth.

Mr. A. M. SAMUEL: How can full consideration be received other than in money or money's worth? What is the meaning of "money's worth"? How can a thing be sold or exchanged for a full consideration unless that consideration is in money or money's worth? It it a confusion of terms. We are not at variance with the object of the right hon. Gentleman.

Mr. SMITHERS: Will the Chancellor of the Exchequer tell us who is the deciding judge, as to whether a sale is bona fide or whether it is for full consideration in money or money's worth?

Mr. P. SNOWDEN: The courts.

Mr. SMITHERS: Who is the person who decides when a claim is made for Estate Duty?

Sir D. HERBERT: May I, with great respect and without waste of time, press this matter upon the right hon. Gentleman? I can imagine these cases going before the Courts in the future and the judges being inclined to make remarks not altogether complimentary about our Finance Acts, saying, perhaps, "What does the legislature mean by putting in here two different expressions both directed to the same end—the words 'bona fide' and the words 'for full consideration in money or money's worth?'" I do not want to press the Amendment too far, but I suggest that the right hon. Gentleman should move out one or other of the phrases. If he does not leave out the words which I propose should be left out, he should leave out the words "bona fide" which have so often been left out.

The ATTORNEY-GENERAL: We have not left out the words "bona fide" in connection with the word "sale." We have retained them. We have left them out with regard to interest and dividends, but on two occasions we have retained them in connection with sale. A very
frequent form of transfer of this sort is a transfer from a man to his son which is generally expressed, as the hon. Member knows, out of consideration of natural love and affection. Natural love and affection are not money or money's worth.

Sir D. HERBERT: It is not sale or exchange.

The ATTORNEY-GENERAL: It is not a thing which can be measured in terms of money at all. It may be a perfectly bona fide transaction. [Interruption.] I come to the next proposition. Instead of being in a position to give something to your son, you give something at a very much lower price than its full value. That may be perfectly bona fide, and at the same time may not be full consideration in money or money's worth. The two phrases do mean something different.

Mr. S. BEVAN: The case which the Attorney-General has put of the transfer to a son for an inadequate consideration or for no consideration at all cannot possibly be a bona fide sale or exchange. One of the objects of a bona fide sale or exchange is full consideration in money or money's worth. Why should one of the badges be expressed in the Clause to the exclusion of all others? A bona fide sale involves full consideration in money or money's worth. Is that to be an exclusive badge, or are there to be other badges? In my submission, either the expression "bona fide" or the provision "for full consideration in money or money's worth" is unnecessary. One is involved in the other. It is only introducing words which are unnecessary, which will lead to litigation and the intervention of the lawyers, and to confusion.

Mr. MARJORIBANKS: I can see very little point in the words "bona fide." In this particular instance I would inform the Attorney-General of a very curious instance of the words "bona fide."

The CHAIRMAN: We have passed the words "bona fide." They stand part of the Clause.

Amendment negatived.

Sir A. STEEL-MAITLAND: I beg to move, in page 28, line 13, at the end, to insert the words:
except in so far as such proceeds have been spent in the ordinary course of business of the company.
This Amendment means that when a certain amount of such property of a company has been sold and the proceeds have been spent in the development of the company, this shall not be reckoned in with the rest in estimating the total value on which Estate Duty shall be paid.

Amendment negatived.

Sir D. HERBERT: I beg to move, in page 28, line 16, at the end, to insert the words:
(a) a sum which bears to the total amount of the expenses of, and in connection with, the formation of the company and the transfer of property thereto the same proportion as the value of the property at the date of death bears to the value of all property of the company at that date.
This Amendment is one of some substance. The Committee must not forget that in cases where companies are formed in this way there is considerable expense. Taxation is payable to the Treasury as Stamp Duty on the formation of these companies, and as Stamp Duty on the transfer of property to these companies. The effect of my Amendment, quite briefly and shortly, is that in determining the value of any property which is passed over under this Section, there shall be deducted from the principal value thereof, not only those sums which are set out in the Bill, but also a sum which is a proper proportion of the total amount of expense incurred in connection with the formation of a company and the transfer of a property to it. In the hope of saving time, I do not propose to elaborate this, as I think the reasons will be fairly obvious. I hope that it will be accepted by the Chancellor, and if he has any solid objection, I hope he will say just a word in reply.

Mr. P. SNOWDEN: As I understand this Amendment, it is that the costs of the promotion of a company shall be deducted in determining the value of the property that is transferred. It is very difficult to imagine a case where an estate is to be transferred to a company except for the purpose of avoiding Death Duties. Therefore, this Amendment really means that a person forms a company for the purpose of avoiding Death Duties, and
then the State is asked to compound the felony by practically paying the cost incurred in the formation of that company.

11.0 p.m.

Sir D. HERBERT: Really, I have discussed these questions of tax avoidance with every Chancellor of the Exchequer who has been in office for the last 12 years, and I have never yet known a Chancellor of the Exchequer do otherwise than admit that, if a man without dishonesty can get out of paying taxation by a legal method, he was entitled to do it. But when it comes to describing it as a felony, I am afraid the right hon. Gentleman is rather giving away the position which he ought to be occupying in a case of this kind. Let it be clearly understood. Every man who owns any substantial amount of property, any kind of real or personal or any other property, is nothing else but a fool if, in making his business arrangements, he does not at least take care not to pay more taxation than is absolutely necessary. [Interruption.] I do not want to waste time, and if hon. Gentlemen will put off their compliments a little longer, they will get to bed earlier. There must be many cases where what are known as estate companies have been formed, and where, no doubt, one result is a certain saving of taxation. Let me put it in that way, for the purpose of my argument. Let me even go further, and agree with the right hon. Gentleman that one result of it is an avoidance of a certain amount of taxation. The learned Attorney-General will know this perfectly well. It is very often one of the considerations which leads a man to form a company, but it is by no means the only one. I venture to say that I am not to be contradicted. If the law allows a man to escape taxation by doing that, he is entitled to do it. But if you get a case where that is only one of the reasons for forming the company—I can assure hon. Members that. I know of absolute cases which have happened where the primary object has not been the avoidance of tax, although a certain saving of taxation has been one of the results—in those circumstances, many of the people who form those companies will be hit by this Clause, to a small extent. They will probably not grumble because they will say, "That was not the main object for which we formed the
company," and if they are deprived of some saving of tax it does not really make any difference to their entire plan. They will still wish to keep the company going for the other reasons for which they formed it. I suggest that in those cases it is at least fair that this deduction of the expenses of forming the company should be met. In making that submission I claim that I am entitled to a little more favourable consideration from the point of view of the deliberate tax avoidance by reason of the quite unfair suggestion that the Chancellor of the Exchequer has placed upon the Amendment by referring to it as proposing something in the nature of a penal offence.

Sir B. PETO: I will not emphasise the very serious phrase that the Chancellor of the Exchequer used, but I would like to know what the Amendment means. What do these expenses consist of? In the main they are stamps. Stamps are a form of taxation paid into the Treasury. What the Chancellor of the Exchequer is doing is to say, "I am not only going to make the avoidance of taxation illegal by these methods, whether tax avoidance is the sole purpose in forming the company or not, but if a sum of money has already been paid into the Treasury in what was up to the passing of this Bill a perfectly legal transaction, I am going to say to the taxpayer: 'You shall forfeit all the money you have paid to the Treasury in stamps and I will prevent you from having any benefit whatever, because I shall charge you full Estate Duty, just as if you had not formed the company.'" That seems to be the position. The Chancellor of the Exchequer is taking up the position of the farmer's boy, who on seeing a toad, stamped on it and said: "I'll larn 'ee to be a toad."

Mr. SMITHERS: The Chancellor of the Exchequer has described this Amendment as compounding a felony. The Government seem to have this subject of evasion on their brains at the expense of every other consideration. Speaking from memory, I think that one of our Lord Justices, Lord Moulton, has laid it down that it is the duty of trustees so to place their trust funds that they get the biggest income they can for their beneficiaries, and so place the funds that they are subject to the least possible taxation. It is
not simply a case of evasion or of tax dodging but it is their duty so to do

Captain CROOKSHANK: I think the Chancellor of the Exchequer, from his look, made the remark about compounding a felony as a joke. Perhaps he would like to put it on record in the OFFICIAL REPORT that it was said as a joke. People reading the OFFICIAL REPORT will not have seen his face.

Mr. P. SNOWDEN: The hon. Member for Chislehurst (Mr. Smithers) declined to give way, but I was rising for the purpose of saying that the remark was made jocularly.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 142 Noes, 248.

Division No. 405.]
AYES.
[11.7 p.m.


Acland-Troyte, Lieut.-Colonel
Falle, Sir Bertram G.
Ramsbotham, H.


Ainsworth, Lieut.-Col. Charles
Ferguson, Sir John
Reid, David D. (County Down)


Allen, W. E. D. (Belfast, W.)
Fielden, E. B.
Remer, John R.


Astor, Viscountess
Ford, Sir P. J.
Rentoul, Sir Gervais S.


Atholl, Duchess of
Forestier-Walker, Sir L.
Reynolds, Col. Sir James


Atkinson, C.
Fremantle, Lieut.-Colonel Francis E.
Richardson, Sir P. W. (Sur'y, Ch't'sy)


Baillie-Hamilton, Hon. Charles W.
Ganzoni, Sir John
Roberts, Sir Samuel (Ecclesall)


Balfour, Captain H. H. (I. of Thanet)
Gault, Lieut.-Col. Andrew Hamilton
Rodd, Rt. Hon. Sir James Rennell


Balniel, Lora
Glyn, Major R. G. C.
Ross, Major Ronald D.


Beamish, Bear-Admiral T. P. H.
Gower, Sir Robert
Ruggles-Brise, Lieut.-Colonel E. A.


Betterton, Sir Henry B.
Graham, Fergus (Cumberland, N.)
Russell, Alexander West (Tynemouth)


Bevan, S. J. (Holborn)
Greene, W. P. Crawford
Salmon, Major I.


Bird, Ernest Roy
Grenfell, Edward C. (City of London)
Samuel, A. M. (Surrey, Farnham)


Bourne, Captain Robert Croft
Guinness, Rt. Hon. Walter E.
Sandeman, Sir N. Stewart


Bowyer, Captain Sir George E. W.
Hacking, Rt. Hon. Douglas H.
Sassoon, Rt. Hon. Sir Philip A. G. D.


Bracken, B.
Hall, Lieut.-Col. Sir F. (Dulwich)
Savery, S. S.


Braithwaite, Major A. N.
Hammersley, S. S.
Smith, Louis W. (Sheffield, Hallam)


Brown, Col. D. C. (N'th'l'd., Hexham)
Harvey, Major S. E. (Devon, Totnes)
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Haslam, Henry C.
Smithers, Waldron


Buchan, John
Henderson, Capt. R. R. (Oxf'd, Henley)
Somerville, A. A. (Windsor)


Bullock, Captain Malcolm
Heneage, Lieut.-Colonel Arthur P.
Somerville, D. G. (Willesden, East)


Butler, R. A.
Herbert, Sir Dennis (Hertford)
Southby, Commander A. R. J.


Cayzer, Sir C. (Chester, City)
Hills, Major Rt. Hon. John Waller
Spender-Clay, Colonel H.


Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Iveagh, Countess of
Stanley, Lord (Fylde)


Chadwick, Capt. Sir Robert Burton
King, Commodore Rt. Hon. Henry D.
Steel-Maitland, Rt. Hon. Sir Arthur


Christie, J. A.
Lamb, Sir J. Q.
Stuart, Hon. J. (Moray and Nairn)


Churchill, Rt. Hon. Winston Spencer
Lane Fox, Col. Rt. Hon. George R.
Thomas, Major L. B. (King's Norton)


Colfox, Major William Philip
Leighton, Major B. E. P.
Thomson, Sir F.


Colman, N. C. D.
Llewellin, Major J. J.
Titchfield, Major the Marquess of


Colville, Major D. J.
Locker-Lampson, Com. O. (Handsw'th)
Train, J.


Courthope, Colonel Sir G. L.
Long, Major Eric
Tryon, Rt. Hon. George Clement


Cranborne, Viscount
McConnell, Sir Joseph
Turton, Robert Hugh


Crichton-Stuart, Lord C.
Maitland, A. (Kent, Faversham)
Wallace, Capt. D. E. (Hornsey)


Croft, Brigadier-General Sir H.
Makins, Brigadier-General E.
Ward, Lieut.-Col. Sir A. Lambert


Crookshank, Capt. H. C.
Marjoribanks, E. C.
Warrender, Sir Victor


Croom-Johnson, R. P.
Merriman, Sir F. Boyd
Waterhouse, Captain Charles


Culverwell, C. T. (Bristol, West)
Mitchell-Thomson, Rt. Hon. Sir W.
Wayland, Sir William A.


Cunliffe-Lister, Rt. Hon. Sir Philip
Mond, Hon. Henry
Wells, Sydney R.


Dalkeith, Earl of
Monsell, Eyres, Com. Rt. Hon. Sir B.
Wilson, G. H. A. (Cambridge U.)


Dalrymple-White, Lt.-Col. Sir Godfrey
Morrison, W. S. (Glos., Cirencester)
Windsor-Clive, Lieut.-Colonel George


Davies, Dr. Vernon
Muirhead, A. J.
Wolmer, Rt. Hon. Viscount


Davies, Maj. Geo. F. (Somerset, Yeovil)
Newton, Sir D. G. C. (Cambridge)
Womersley, W. J.


Dixon, Captain Rt. Hon. Herbert
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)
Wood, Rt. Hon. Sir Kingsley


Duckworth, G. A. V.
O'Connor, T. J.
Worthington-Evans, Rt. Hon. Sir L.


Eden, Captain Anthony
O'Neill, Sir H.



Edmondson, Major A. J.
Ormsby-Gore, Rt. Hon. William
TELLERS FOR THE AYES.—


Elliot, Major Walter E.
Peake, Capt. Osbert
Major Sir George Hennessy and


Erskine, Lord (Somerset, Weston-s. M.)
Percy, Lord Eustace (Hastings)
Sir George Penny.


Everard, W. Lindsay
Peto, Sir Basil E. (Devon, Barnstaple)



NOES.


Adamson, Rt. Hon. W. (Fife, West)
Barr, James
Brothers, M.


Adamson, W. M. (Staff., Cannock)
Batey, Joseph
Brown, C. W. E. (Notts, Mansfield)


Addison, Rt. Hon. Dr. Christopher
Bellamy, Albert
Brown, Ernest (Leith)


Aitchison, Rt. Hon. Craigie M.
Benn, Rt. Hon. Wedgwood
Brown, Rt. Hon. J. (South Ayrshire)


Alexander, Rt Hon. A. V. (Hillsbro')
Bennett, Capt. Sir E. N. (Cardiff C.)
Buchanan, G.


Alpass, J. H.
Bennett, William (Battersea, South)
Burgin, Dr. E. L.


Ammon, Charles George
Benson, G.
Caine, Derwent Hall-


Arnott, John
Bentham, Dr. Ethel
Cameron, A. G.


Aske, Sir Robert
Bevan, Aneurin (Ebbw Vale)
Cape, Thomas


Attlee, Clement Richard
Bowen, J. W.
Charleton, H. C.


Baker, John (Wolverhampton, Bilston)
Bowerman, Rt. Hon. Charles W.
Chater, Daniel


Baldwin, Oliver (Dudley)
Brockway, A. Fenner
Church, Major A. G.


Barnes, Alfred John
Brooke, W.
Clarke, J. S.


Cluse, W. S.
Kenworthy, Lt.-Com. Hon. Joseph M.
Richards, R.


Clynes, Rt. Hon. John R.
Kinley, J.
Richardson, R. (Houghton-le-Spring)


Cocks, Frederick Seymour
Kirkwood, D.
Riley, Ben (Dewsbury)


Compton, Joseph
Lang, Gordon
Ritson, J.


Daggar, George
Lathan, G.
Romeril, H. G.


Dallas, George
Law, Albert (Bolton)
Rosbotham, D. S. T.


Dalton, Hugh
Lawrence, Susan
Rowson, Guy


Davies, E. C. (Montgomery)
Lawrie, Hugh Hartley (Straiybridge)
Russell, Richard John (Eddlsbury)


Day, Harry
Lawson, John James
Samuel, H. Walter (Swansea, West)


Dickson, T.
Lawther, W. (Barnard Castle)
Sanders, W. S.


Dudgeon, Major C. R.
Leach, W.
Sandham, E.


Dukes, C.
Lee, Frank (Derby, N. E.)
Sawyer, G. F.


Duncan, Charles
Lee, Jennie (Lanark, Northern)
Scurr, John


Ede, James Chuter
Lees, J.
Sexton, James


Edmunds, J. E.
Lewis, T. (Southampton)
Shaw, Rt. Hon. Thomas (Preston)


Edwards, E. (Morpeth)
Lindley, Fred W.
Shepherd, Arthur Lewis


Egan, W. H.
Logan, David Gilbert
Shield, George William


Elmley, Viscount
Longbottom, A. W.
Shiels, Dr. Drummond


Foot, Isaac
Longden, F.
Shillaker, J. F.


Freeman, Peter
Lunn, William
Short, Alfred (Wednesbury)


Gardner, B. W. (West Ham, Upton)
Macdonald, Gordon (Ince)
Simmons, C. J.


Gardner, J. P. (Hammersmith, N.)
MacDonald, Rt. Hon. J. R. (Seaham)
Sinclair, Sir A. (Caithness)


Gibbins, Joseph
MacDonald, Malcolm (Bassetlaw)
Sinkinson, George


Gibson, H. M. (Lancs, Mossley)
McElwee, A.
Sitch, Charles H.


Gill, T. H.
McEntee, V. L.
Smith, Ben (Bermondsey, Rotherhithe)


Gillett, George M.
McGovern, J. (Glasgow, Shettleston)
Smith, Frank (Nuneaton)


Glassey, A. E.
McKinlay, A.
Smith, Rennie (Penistone)


Gossling, A. G.
Maclean, Sir Donald (Cornwall, N.)
Smith, Tom (Pontefract)


Gould, F.
Maclean, Neil (Glasgow, Govan)
Smith, W. R. (Norwich)


Graham, D. M. (Lanark, Hamilton)
McShane, John James
Snowden, Rt. Hon. Philip


Graham, Rt. Hon. Wm. (Edin., Cent.)
Malone, C. L'Estrange (N'thampton)
Snowden, Thomas (Accrington)


Granville, E.
Mander, Geoffrey le M.
Sorensen, R.


Gray, Milner
Mansfield, W.
Stamford, Thomas W.


Grenfell, D. R. (Glamorgan)
Marcus, M.
Stephen, Campbell


Griffith, F. Kingsley (Middlesbro' W.)
Markham, S. F.
Stewart, J. (St. Rollox)


Griffiths, T. (Monmouth, Pontypool)
Marley, J.
Sullivan, J.


Groves, Thomas E.
Marshall, Fred
Sutton, J. E.


Grundy, Thomas W.
Mathers, George
Taylor, R. A. (Lincoln)


Hall, F. (York, W. R., Normanton)
Maxton, James
Thurtle, Ernest


Hall, G. H. (Merthyr Tydvil)
Messer, Fred
Tinker, John Joseph


Hall, Capt. W. P. (Portsmouth, C.)
Middleton, G.
Tout, W. J.


Hamilton, Mary Agnes (Blackburn)
Millar, J. D.
Townend, A. E.


Hardie, George D.
Milner, Major J.
Trevelyan, Rt. Hon. Sir Charles


Harris, Percy A.
Morgan, Dr. H. B.
Vaughan, D. J.


Hartshorn, Rt. Hon. Vernon
Morley, Ralph
Viant, S. P.


Hastings, Dr. Somerville
Morris, Rhys Hopkins
Walkden, A. G.


Haycock, A. W.
Morrison, Herbert (Hackney, South)
Walker, J.


Hayes, John Henry
Morrison, Robert C. (Tottenham, N.)



Henderson, Arthur, Junr. (Cardiff, S.)
Mort, D. L.
Wallace, H. W.


Henderson, Thomas (Glasgow)
Moses, J. J. H.
Watkins, F. C.


Henderson, W. W. (Middx., Enfield)
Mosley, Lady C. (Stoke-on-Trent)
Watson, W. M. (Dunfermline)


Herriotts, J.
Mosley, Sir Oswald (Smethwick)
Watts-Morgan, Lt.-Col. D. (Rhondda)


Hirst, G. H. (York W. R. Wentworth)
Muff, G.
Wellock, Wilfred


Hirst, W, (Bradford, South)
Muggeridge, H. T.
Welsh, James (Paisley)


Hoffman, P. C.
Murnin, Hugh
Welsh, James C. (Coatbridge)


Hore-Beilsha, Leslie
Nathan, Major H. L.
Westwood, Joseph


Horrabin, J. F.
Naylor, T. E.
White, H. G.


Hudson, James H. (Huddersfield)
Newman, Sir R. H. S. D. L. (Exeter)
Whilteley, Wilfrid (Birm., Ladywood)


Hunter, Dr. Joseph
Noel Baker, P. J.
Whiteley, William (Blaydon)


Hutchison, Maj.-Gen. Sir R.
Oliver, P. M. (Man., Blackley)
Williams, David (Swansea, East)


Isaacs, George
Palin, John Henry
Williams, Dr. J. H. (Llanelly)


Jenkins, W. (Glamorgan, Neath)
Palmer, E. T.
Wilson, C. H. (Sheffield, Attercliffe)


John, William (Rhondda, West)
Parkinson, John Allen (Wigan)
Wilson, J. (Oldham)


Johnston, Thomas
Perry, S. F.
Wilson, R. J. (Jarrow)


Jones, F. Llewellyn- (Flint)
Pethick-Lawrence, F. W.
Wise, E. F.


Jones, Rt. Hon. Leif (Camborne)
Phillips, Dr. Marion
Wood, Major McKenzie (Banff)


Jones, Morgan (Caerphilly)
Potts, John S.
Wright, W. (Rutherglen)


Jowett, Rt. Hon. F. W.
Price, M. P.
Young, R. S. (Islington, North)


Jowitt, Rt. Hon. Sir W. A.
Quibell, D. J. K.



Kelly, W. T.
Ramsay, T. B. Wilson
TELLERS FOR THE NOES.—


Kennedy, Thomas
Raynes, W. R.
Mr. Charles Edwards and Mr. Paling.

Dr. BURGIN: I beg to move, in page 28, line 17, to leave out from the beginning to the word "applied" in line 18, and to insert instead thereof the words "any sum."
This Sub-section seeks to set out the deductions that can be made in calculating the value for the purposes of this
Clause, and it is provided that one deduction can be made in respect of a borrowing by the company to the extent to which that borrowing has not been repaid. It seems to me that a company which spends money on improvements of the property may find that money in various ways and that we are not concerned
with the origin but with the application of the money.
My Amendment is purely a question of drafting. Why should you make any difference in money spent on improvements to property if that money is taken from the company itself, has been borrowed and has been repaid, or has been borrowed and only partially repaid? Under the Clause as it stands, although money from all these three sources might have been expended on improvements, it is only the third type which is allowed as a deduction. I submit that there is some confusion of thought and that the point is that if the money has been expended on improvements, that should be allowed as a deduction, and that it does not matter from what source the money has been procured.

The ATTORNEY-GENERAL: The hon. Member said there was some confusion of thought here. I was sorry to hear him say so, and I am not going to be guilty of a tu quoque, but I would ask him to remember that when you are considering the taxation of capital sums, it is idle to bring in considerations referring to Income Tax. What you are dealing with for the purposes of Estate Duty is the value of the property at the time of death. To that there is this exception: It is well understood in our law that where you are valuing a property for the purpose of Estate Duty, you are entitled to deduct any outstanding charges upon the property. If you have borrowed money by way of mortgage and have not paid that mortgage back, you are entitled to deduct from the value of the property the value of that outstanding charge. The hon. Member will see at once that there is not a, charge outstanding if the charge has been paid off. Therefore he will appreciate that there is, in the nature of things, a distinction between money which you borrow, that is, money which is the subject-matter of the charge, and money that you do not raise in that way but money which you spend out of your current income which gives rise to no charge at all. It is the legal principle in every single case of Estate Duty, whichever Statute you are considering, that you have to value all the property
as you find it. If it has been repaired out of income, so much the better, and so much the worse for the other taxpayers; the only thing you can consider is the outstanding charge. That is why we have put in these qualifications, and if this Amendment were accepted, it would make a breach in the whole principle of Estate Duty law.

Sir D. HERBERT: We are dealing with a remarkable new condition of affairs. This is not a case of taxing property passing at death. It does not pass on the death, and the Chancellor and the Attorney-General are trying to find some other means of levying a different sort of tax. This is a tax which is levied on a remarkable and entirely novel method of computation of all sorts and kinds of different values. It is altogether an artificial form of Estate Duty. Under these circumstances I suggest that it is not a case where it ought to be pressed too far. It is a case of levying an Estate Duty and making it payable in cases where, under the law as it stands at the present time, it is not payable. It is a case of making that Estate Duty payable by persons who have done certain things which are not criminal offences. I suggest that in these circumstances what we have to look at is what is fair, and if after this property has been parted with by the owner to a company, money is spent upon it, that money ought not to come into consideration for the purpose of paying Estate Duty on property when the person you are really trying to get at is not the company at all. It is possible the company may be in different ownership. The person you regard as the offender is the person who parted with the property, and it is the value of the property at that time that should be considered rather than the property as improved by the company after it has been parted with by the man in question. I suggest flat the confusion of thought, at any rate, does not lay with the hon. Gentleman who moved the Amendment; he has solid reason for it, and it deserves to be met with the most careful thought, and some better argument than has been directed against it.

Lieut.-Colonel HENEAGE: As the Clause reads it is going to encourage companies to borrow money for the purpose of improving the property, that is
to say, instead of paying with ready money they are going to use borrowed money for this one particular item in order to escape this taxation. I suggest that, while the words mentioned by my hon. Friend may not be quite correct, something ought to be done in order to make it not worth the while of the company to borrow the money.

Amendment negatived.

Mr. PETHICK-LAWRENCE: I beg to move in page 28, line 21, to leave out paragraph (b), and to insert instead thereof the words:
(b) a sum equal to the capital sum of money paid to the deceased as part of the consideration for the transfer; and where estate duty is payable in connection with the death on any shares of or debentures in the company, a sum equal to the principal value of such of those shares or debentures as were transferred or allotted to the deceased in consideration of the transfer of the property.
I think that these new words are not only more comprehensive and more just than the words in the existing paragraph (b), but they are also more intelligible. It is suggested in the Amendment that relief be given to the taxpayer by deducting from the value of the property the consideration obtained for the transfer. Where that consideration is paid in cash, the amount of the cash is deducted. It has, of course, gone to swell the general value of the estate. Where the consideration took the form of shares or debentures, the amount that will be deducted will be the value of those shares or debentures as they will be at the time of death. I think it is a reasonable Amendment and that it is comprehensive in the relief that it gives.

Amendment agreed to.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

Sir L. WORTHINGTON-EVANS: I am very anxious to get on with Clause 31 and leave until to-morrow Clauses 32 and 33, upon which some really important questions arise. This Clause bears very little resemblance to the Clause which appeared in the Bill when it was introduced,
and although it contains some improvements, it is still a Clause which is entirely ineffective for the purposes for which it was introduced. In one of his jesting moods the Chancellor of the Exchequer betrayed what was really in his mind when he spoke about the estate owner who transfers his property to a private company as a man guilty of a felonious act. We are told that that was a jest, but many a true word is spoken in jest. What is the attitude of the right hon. Gentleman towards these perfectly innocent transactions? I have already called attention to the case where an estate owner transferred to a private company for cash or debentures was exempted under certain circumstances from this charge, but the Chancellor of the Exchequer has not extended that to shares in a company. I still press that that case should be re-considered. The Clause as it stands does not prevent an estate owner with cash investing that cash in the shares of the company. The right hon. Gentleman might as well deal with that point at once.

Viscount WOLMER: We ought to make a very distinct protest against the way the Government have treated agriculture. The effect of this Clause is to single out those who try to put their estates on a business footing. Under this Bill the owner of any private business, except a landed estate, may transfer it to a private company and retain part of the purchase price in the form of shares; but if it is the case of a life tenant of a landed estate, he cannot merge his life interest in a private company without being subjected to the penal taxation imposed by the Chancellor of the Exchequer. The immediate effect of these proposals is to deprive estates of capital which is badly needed for the development of agricultural estates, and it is a blow which will affect the tenants of every settled estate in the country. This policy will affect the agricultural labourers. The Government have not done anything to help agriculture, and Clauses 29 and 30 will do a great deal to make the position of agriculture a great deal worse.

Question put, "That the Clause, as amended, stand part of the Bill."

The Committee divided: Ayes, 224; Noes, 140.

Division No. 406.]
AYES.
[11.36 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Hartshorn, Rt. Hon. Vernon
Newman, Sir R. H. S. D. L. (Exeter)


Adamson, W. M. (Staff., Cannock)
Hastings, Dr. Somerville
Noel Baker, P. J.


Addison, Rt. Hon. Dr. Christopher
Haycock, A. W.
Oliver, P. M. (Man., Blackley)


Aitchison, Rt. Hon. Craigie M.
Hayes, John Harvey
Palin, John Henry


Alexander, Rt. Hon. A. V. (Hillsbro')
Henderson, Arthur, Junr. (Cardiff, S.)
Paling, Wilfrid


Alpass, J. H.
Henderson, W. W. (Middx., Enfield)
Parkinson, John Allen (Wigan)


Ammon, Charles George
Herriotts, J.
Perry, S. F.


Arnott, John
Hirst, G. H. (York W. R. Wentworth)
Pethick-Lawrence, F. W.


Aske, Sir Robert
Hirst, W. (Bradford, South)
Phillips, Dr. Marion


Attlee, Clement Richard
Hollins, A.
Potts, John S.


Baldwin, Oliver (Dudley)
Hoffman, P. C.
Price, M. P.


Barnes, Alfred John
Hudson, James H. (Huddersfield)
Quibell, D. J. K.


Barr, James
Hunter, Dr. Joseph
Ramsay, T. B. Wilson


Batey, Joseph
Hutchison, Maj.-Gen. Sir R.
Raynes, W. R.


Bellamy, Albert
Isaacs, George
Richards, R.


Benn, Rt. Hon. Wedgwood
Jenkins, W. (Glamorgan, Neath)
Richardson, R. (Houghton-le-Spring)


Bennett, William (Battersea, South)
John, William (Rhondda, West)
Riley, Ben (Dewsbury)


Benson, G.
Johnston, Thomas
Ritson, J.


Bentham, Dr. Ethel
Jones, F. Llewellyn- (Flint)
Romeril, H. G.


Bevan, Aneurin (Ebbw Vale)
Jones, Rt. Hon Leif (Camborne)
Rosbotham, D. S. T.


Bowen, J. W.
Jones, Morgan (Caerphilly)
Rowson, Guy


Brockway, A. Fenner
Jowett, Rt Hon. F. W.
Samuel, H. Walter (Swansea, West)


Brooke, W.
Jowitt, Rt. Hon. Sir W. A.
Sanders, W. S.


Brothers, M.
Kelly, W. T.
Sandham, E.


Brown, C. W. E. (Notts, Mansfield)
Kennedy, Thomas
Sawyer, G. F.


Brown, Ernest (Leith)
Kenworthy, Lt.-Com. Hon. Joseph M.
Scurr, John


Brown, Rt. Hon. J. (South Ayrshire)
Kinley, J.
Shaw, Rt. Hon. Thomas (Preston)


Buchanan, G.
Kirkwood, D.
Shepherd, Arthur Lewis


Caine, Derwent Hall-
Lang, Gordon
Shield, George William


Cameron, A. G.
Lansbury, Rt. Hon. George
Shiels, Dr. Drummond


Cape, Thomas
Lathan, G.
Shillaker, J. F.


Charleton, H. C.
Law, Albert (Bolton)
Simmons, C. J.


Chater, Daniel
Lawrence, Susan
Sinkinson, George


Church, Major A. G.
Lawson, John James
Sitch, Charles H.


Clarke, J. S.
Lawther, W. (Barnard Castle)
Smith, Ben (Bermondsey, Rotherhithe)


Cluse, W. S.
Leach, W.
Smith, Frank (Nuneaton)


Cocks, Frederick Seymour
Lee, Frank (Derby, N. E.)
Smith, Rennie (Penistone)


Compton, Joseph
Lee, Jennie (Lanark, Northern)
Smith, Tom (Pontefract)


Daggar, George
Lees, J.
Smith, W. R. (Norwich)


Dallas, George
Lewis, T. (Southampton)
Snowden, Rt. Hon. Philip


Davies, E. C. (Montgomery)
Lindley, Fred W.
Snowden, Thomas (Accrington)


Day, Harry
Lloyd, C. Ellis
Sorensen, R.


Dickson, T.
Logan, David Gilbert
Stamford, Thomas W.


Dudgeon, Major C. R.
Longbottom, A. W.
Stephen, Campbell


Dukes, C.
Longden, F.
Sullivan, J.


Duncan, Charles
Lunn, William
Sutton, J. E.


Ede, James Chuter
Macdonald, Gordon (Ince)
Taylor, R. A. (Lincoln)


Edmunds, J. E.
MacDonald, Rt. Hon. J. R. (Seaham)
Thurtle, Ernest


Edwards, C. (Monmouth, Bedwellty)
MacDonald, Malcolm (Bassetlaw)
Tinker, John Joseph


Edwards, E. (Morpeth)
McElwee, A.
Tout, W. J.


Egan, W. H.
McEntee, V. L.
Townend, A. E.


Elmley, Viscount
McGovern, J. (Glasgow, Shettleston)
Vaughan, D. J.


Foot, Isaac
McKinlay, A.
Viant, S. P.


Freeman, Peter
McShane, John James
Walkden, A. G.


Gardner, B. W. (West Ham, Upton)
Malone, C. L'Estrange (N'thampton)
Walker, J.


Gardner, J. P. (Hammersmith, N.)
Mansfield, W.
Wallace, H. W.


Gibbins, Joseph
Marcus, M.
Watson, W. M. (Dunfermline)


Gibson, H. M. (Lancs, Mossley)
Markham, S. F.
Watts-Morgan, Lt.-Col. D. (Rhondda)


Gill, T. H.
Marley, J.
Wellock, Wilfred


Gillett, George M.
Marshall, Fred
Welsh, James (Paisley)


Glassey, A. E.
Mathers, George
Welsh, James C. (Coatbridge)


Gossling, A. G.
Maxton, James
West, F. R.


Gould, F.
Messer, Fred
Westwood Joseph


Graham, D. M. (Lanark, Hamilton)
Middleton, G.
White, H. G.


Graham, Rt. Hon. Wm. (Edin., Cent.)
Millar, J. D.
Whiteley, Wilfrid (Birm., Ladywood)


Granville, E.
Milner, Major J.
Williams, David (Swansea, East)


Grenfell, D. R. (Glamorgan)
Morgan, Dr. H. B.
Williams, Dr. J. H. (Llanelly)


Griffith, F. Kingsley (Middlesbro' W.)
Money, Ralph
Wilson, C. H. (Sheffield, Attercliffe)


Groves, Thomas E.
Morrison, Herbert (Hackney, South)
Wilson, J. (Oldham)


Grundy, Thomas W.
Mort, D. L.
Wilson, R. J. (Jarrow)


Hall, F. (York, W. R., Normanton)
Moses, J. J. H.
Wise, E. F.


Hall, G. H. (Merthyr Tydvil)
Mosley, Lady C. (Stoke-on-Trent)
Wood, Major McKenzie (Banff)


Hall, Capt. W. P. (Portsmouth, C.)
Mosley, Sir Oswald (Smethwick)
Young, R. S. (Islington, North)


Hamilton, Mary Agnes (Blackburn)
Muff, G.



Hardie, George D.
Murnin, Hugh
TELLERS FOR THE AYES.—


Harris, Percy A.
Nathan, Major H. L.
Mr. Thomas Henderson and Mr. William Whiteley.




NOES.


Acland-Troyte, Lieut.-Colonel
Allen, W. E. D. (Belfast, W.)
Atholl, Duchess of


Ainsworth, Lieut.-Col. Charles
Amery, Rt. Hon, Leopold C. M. S.
Atkinson, C.


Albery, Irving James
Astor, Viscountess
Baillie-Hamilton, Hon. Charles W.




Balfour, George (Hampstead)
Ford, Sir P. J.
Ramsbotham, H.


Balfour, Captain H. H. (I. of Thanet)
Forestier-Walker, Sir L.
Remer, John R.


Balniel, Lord
Fremantle, Lieut.-Colonel Francis E.
Rentoul, Sir Gervais S.


Beamish, Rear-Admiral T. P. H.
Ganzoni, Sir John
Reynolds, Col. Sir James


Betterton, Sir Henry B.
Gauit, Lieut.-Col. Andrew Hamilton
Richardson, Sir P. W. (Sur'y, Ch'ts'y)


Bevan, S. J. (Holborn)
Gower, Sir Robert
Roberts, Sir Samuel (Ecclesall)


Bird, Erneat Roy
Graham, Fergus (Cumberland, N.)
Rodd, Rt. Hon. Sir James Rennell


Bourne, Captain Robert Croft
Greene, W. P. Crawford
Ross, Major Ronald D.


Bowyer, Captain Sir George E. W.
Grenfell, Edward C. (City of London)
Ruggles-Brise, Lieut.-Colonel E. A.


Bracken, B.
Guinness, Rt. Hon. Walter E.
Russell, Alexander West (Tynemouth)


Braithwaite, Major A. N.
Hacking, Rt. Hon. Douglas H.
Samuel, A. M. (Surrey, Farnham)


Brown, Col. D. C. (N'th'l'd., Hexham)
Hall, Lieut.-Col. Sir F. (Dulwich)
Samuel, Samuel (W'dsworth, Putney)


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Hanbury, C.
Sandeman, Sir N. Stewart


Buchan, John
Hartington, Marquess of
Sassoon, Rt. Hon. Sir Philip A. G. D.


Bullock, Captain Malcolm
Harvey, Major S. E. (Devon, Totnes)
Savery, S. S.


Burgin, Dr. E. L.
Haslam, Henry C.
Smith, Louis W. (Sheffield, Hallam)


Butler, R. A.
Henderson, Capt. R. R. (Oxf'd, Henley)
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Heneage, Lieut.-Colonel Arthur P.
Smithers, Waldron


Chadwick, Capt. Sir Robert Burton
Herbert, Sir Dennis (Hertford)
Somerville, A. A. (Windsor)


Christie, J. A.
Hills, Major Rt. Hon. John Walter
Somerville, D. G. (Willesdan, East)


Churchill, Rt. Hon. Winston Spencer
Iveagh, Countess of
Southby, Commander A. R. J.


Colfox, Major William Philip
Lamb, Sir J. Q.
Stanley, Lord (Fylde)


Colman, N. C. D.
Lane Fox, Col. Rt. Hon. George R.
Steel-Maitland, Rt. Hon. Sir Arthur


Colville, Major D. J.
Leighton, Major B. E. P.
Stuart, Hon. J. (Moray and Nairn)


Courthope, Colonel Sir G. L.
Llewellin, Major J. J.
Thomas, Major L. B. (King's Norton)


Crichton-Stuart, Lord C.
Locker-Lampson, Com. O. (Handsw'th)
Thomson, Sir F.


Croft, Brigadier-General Sir H.
Long, Major Eric
Train, J.


Crookshank, Capt. H. C.
McConnell, Sir Joseph
Tryon, Rt. Hon. George Clement.


Croom-Johnson, R. P.
Macdonald, Capt. P. D. (I. of W.)
Turton, Robert Hugh


Culverwell, C. T. (Bristol, West)
Maitland, A. (Kent, Favorsham)
Vaughan-Morgan, Sir Kenyon


Cunliffe-Lister, Rt. Hon. Sir Philip
Marjoribanks, E. C.
Wallace, Capt. D. E. (Hornsey)


Dalkeith, Earl of
Merriman, Sir F. Boyd
Ward, Lieut-Col. Sir A. Lambert


Davidson, Rt. Hon. J. (Hertford)
Mitchell-Thomson, Rt. Hon. Sir W.
Warrender, Sir Victor


Davies, Dr. Vernon
Mond, Hon. Henry
Waterhouse, Captain Charles


Davies, Maj. Geo. F. (Somerset, Yeovil)
Monsell, Eyres, Com. Rt. Hon. Sir B.
Wayland, Sir William A.


Dixon, Captain Rt. Hon. Herbert
Morrison, W. S. (Glos., Clrencester)
Wells, Sydney R.


Duckworth, G. A. V.
Muirhead, A. J.
Wilson, G. H. A. (Cambridge U.)


Dugdale, Capt. T. L.
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)
Windsor-Clive, Lieut.-Colonel George


Eden, Captain Anthony
O'Connor, T. J.
Wolmer, Rt. Hon. Viscount


Edmondson, Major A. J.
O'Neill, Sir H.
Womersley, W. J.


Elliot, Major Walter E.
Ormsby-Gore, Rt. Hon. William
Worthington-Evans, Rt. Hon. Sir L.


Everard, W. Lindsay
Peake, Capt. Osbert



Falle, Sir Bertram G.
Penny, Sir George
TELLERS FOR THE NOES.—


Ferguson, Sir John
Percy, Lord Eustace (Hastings)
Major Sir George Hennessy and


Fielden, E. B.
Peto, Sir Basil E. (Devon, Barnstaple)
Major the Marquess of Titchfield.

POSTPONED CLAUSE 31.—(Charge of duty and powers of recovery.)

Sir D. HERBERT: I beg to move, in page 28, line 34, to leave out from the word "Majesty," to the end of the Sub-section.
These words must have been inserted owing to some mistake, and I invite the spokesman of the Government to say how the words came to be put down, what they mean and whether there is any reason why they should not be left out?

Mr. P. SNOWDEN: I think that I can give the hon. Member a more satisfactory reply than he expects to receive. This is not a matter of any great importance, and I am prepared to accept the Amendment.

Amendment agreed to.

Major NATHAN: I beg to move, in page 28, line 37, to leave out the words
"and every director thereof," and to insert instead thereof the word "concerned."
This is the Clause whereby the duties are charged which have been the subject of discussion in the debates on the two preceding Clauses. Not only is the company in question made liable to the duty under the provisions of 'Subsection (2) of Clause 31, but every director thereof is also made liable. I am unaware of any provision in the law as it exists at present which places on a director an obligation of this character, the obligation of the directors generally being limited to liability to penalties for a specific breach of the Statute.

Mr. P. SNOWDEN: The hon. and gallant Member has made such an appealing case in support of the Amendment that I am prepared to accept it.

Amendment agreed to.

The following Amendment stood upon the Order Paper in the name of Major NATHAN:

In page 29, line 8, at the beginning, to insert the words:
Where a company has become liable for payment of any estate duty by virtue of the provisions of either of the two last preceding sections of this Act.

Major NATHAN: It will be observed that Sub-section (4) gives the Commissioners of Inland Revenue powers to require any private company to furnish certain accounts and documents. This phrase "any private company" had crept in somehow and I know the Chancellor of the Exchequer will wish to bring it into conformity with the phraseology of the Clause. It would give the commissioners unrestricted rights in the matter, regardless of whether the Act applied or not. The modification which the Chancellor is about to suggest had escaped my notice. It makes my Amendment unnecessary, and I therefore do not move it.

Amendment made: In page 29, line 9, after the word "sections," insert the words" and the next following section."—[Mr. Pethick-Lawrence.]

Mr. P. SNOWDEN: I beg to move, in page 29, line 10, to leave out the word "private."
This is the Amendment which renders unnecessary the Amendment of the hon. and gallant Member for North-East Bethnal Green (Major Nathan).

Amendment agreed to.

Further Amendment made: In page 29, line 10, after the word "company" insert the words:
to which this Part of this Act applies."—[Mr. P. Snowden.]

Sir D. HERBERT: I beg to move, in page 29, line 13, after the word "other," to insert the word "relevant."
This is only a drafting Amendment.

Mr. P. SNOWDEN: I have considerable sympathy with the purpose of this Amendment, and although I am not at the moment in a position to accept it I will take it into consideration and see if an agreeable form of words can be discovered.

Sir D. HERBERT: If the right hon. Gentleman will include in such con-
sideration my next Amendment—in page 29, line 13, after the word "particulars" to insert the words" in the possession or under the control of the company"—then I need not move it, and I beg to ask leave to withdraw the Amendment I have just moved.

Amendment, by leave, withdrawn.

Sir D. HERBERT: I beg to move, in page 29, line 16 to leave out the words "of five hundred pounds," and to insert instead thereof the words "not exceeding fifty pounds."
This Amendment is of some importance, but I hope, after our excellent behaviour to the Chancellor of the Exchequer, he will regard it with sympathy. It deals with the question of the penalty. The Clause says:
the company shall be liable to a penalty of five hundred pounds.
I suggest that this is another of the Chancellor's jokes. I want to turn what he has inserted in the original Bill into something really wise, and to reduce the penalty to a sum not exceeding £50.

Mr. P. SNOWDEN: I very much regret that, for the moment, I have come to the end of my concessions. It is quite true that the sum of £500 is a big one, but one must remember that there may be very large sums involved—hundreds of thousands of pounds. Then it should be remembered also that the Commissioners of Inland Revenue have the right of mitigating penalties. Although the maximum penalty may be £500, I think it may be taken that it would be only in a very serious case that the full penalty would be imposed.

Lieut.-Colonel Sir FREDERICK HALL: I suggest to the right hon. Gentleman that he should make an alteration. The Clause assesses the penalty at 2500; make it read "not exceeding."

Mr. SNOWDEN: The Inland Revenue Commissioners have, in Section 35 of the Inland Revenue Regulation Act, 1890, power to mitigate penalties.

Sir D. HERBERT: It may be true that the Commissioners have the power, but I want a proper discretion to be given to the court to whom the case may ultimately go, after the Commissioners. It is absurd to dictate to a
court that it shall never inflict anything but the maximum penalty. If the right hon. Gentleman insists on keeping in the £500, I suggest that he should accept the suggestion in my next Amendment, and insert the words "not exceeding."

Mr. SNOWDEN: I will accept it, although I think I am in danger of making concessions which I may regret. I am quite willing to insert the words.

Major NATHAN: Do I understand the right hon. Gentleman to suggest any penalty could be imposed upon a company at the will of the Commissioners of Inland Revenue?

Mr. SNOWDEN: No.

Major NATHAN: I understand he really means that the courts have power to mitigate a penalty.

Sir D. HERBERT: I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendment made: In page 29, line 16, leave out the word "of," and insert instead thereof the words "not exceeding."—[Sir D. Herbert.]

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

Captain BOURNE: Some companies may not know for certain whether they are or are not liable for the duty, and I suggest that between now and the Report stage the Chancellor of the Exchequer might consider the desirability of the demand being made by the commissioners in the first instance. Clause 29, as amended, is rather ambiguous, and it might well be that the company did not send the necessary notification to the commissioners.

Mr. P. SNOWDEN: It is necessary that we should adjourn now if many hon. Members are to catch their trains. Un
fortunately many of them when we are engaged until 12.15 find that the conveyances have ceased to ply for hire.

Sir A. STEEL-MAITLAND: I will not keep the Committee more than a minute. The right hon. Gentleman has undertaken to consider a number of things before Report, with the Attorney-General. Will he take steps to have their conclusions printed in the form of a White Paper, so that we on this side may have as much time as possible to consider them, instead of merely seeing them on the Report stage, which would mean hindering the proceedings?

Mr. SNOWDEN: I would not like to give that assurance. There may be objections to issuing our decisions in that form. At the moment I think the best way would be, if we decide to have any changes, to submit them as Amendments to be considered on Report.

Sir F. HALL: Will the right hon. Gentleman see that in lines 6 and 7 the words "not, exceeding" are inserted?

Question put, and agreed to.

Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.—[Mr. P. Snowden.]

Committee report Progress; to sit again To-morrow.

The remaining Orders were read, and postponed.

It being after half-past Eleven of the Clock upon Wednesday evening, Mr. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at Five Minutes after Twelve o'Clock.